UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 20-F/A
                                 Amendment No. 1

    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
                   For the fiscal year ended December 31, 2002
                         Commission file number: 1-15194
                     COMPANHIA DE BEBIDAS DAS AMERICAS-AMBEV
             (Exact name of Registrant as specified in its charter)

   American Beverage Company-AmBev            Federative Republic of Brazil
  (Translation of Registrant's name         (Jurisdiction of incorporation or
            into English)                             organization)

                          -----------------------------
                  Rua Dr Renato Paes de Barros 1017, 4o. andar
                         04530-001 Sao Paulo, SP, Brazil
                    (Address of principal executive offices)

                          -----------------------------
 Securities registered or to be registered pursuant to Section 12(b) of the Act:

        TITLE OF EACH CLASS                       NAME OF EACH EXCHANGE
                                                   ON WHICH REGISTERED

   American Depositary Shares,                 New York Stock Exchange
   evidenced by American Depositary
   Receipts, each representing
   100 Common Shares

   Common Shares, no par value*

   American Depositary Shares,                 New York Stock Exchange
   evidenced by American Depositary
   Receipts, each representing 100
   Preferred Shares
   Preferred Shares, no par value*

-------------------
*  Not for trading but only in connection with the registration of the American
   Depositary Shares, pursuant to the requirements of the Securities and
   Exchange Commission.

              Securities for which there is a reporting obligation
                      pursuant to Section 15(d) of the Act:


        TITLE OF EACH CLASS                        NAME OF EACH EXCHANGE
                                                   ON WHICH REGISTERED

   $500,000,000 10 1/2% Notes due December     Not Applicable
   2011 of Companhia Brasileira de Bebidas
   guaranteed by Companhia de Bebidas das
   AMERICAS - AmBev

   Guaranty of the $500,000,000 10 1/2% Notes  Not Applicable
   due December 2011 by Companhia de
   Bebidas das AMERICAS - AmBev


   The number of total outstanding shares of each of the issuer's classes of
               capital or common stock as of June 16, 2003 was:

                         15,735,878,391 Common Shares
                        22,801,455,371 Preferred Shares

    Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
   1934 during the preceding 12 months (or for such shorter period that the
  registrant was required to file such reports), and (2) has been subject to
                such filing requirements for the past 90 days.
                    Yes {X}   No {  }   Not Applicable {  }
   Indicate by check mark which financial statement item the registrant has
                              elected to follow.
                            Item 17 {  }  Item 18 {X}


<PAGE>
                               TABLE OF CONTENTS

                                                                           PAGE


INTRODUCTION.................................................................i

BACKGROUND ON THE COMPANY....................................................i

ACCOUNTING PERIODS AND PRINCIPLES...........................................iv

CURRENCY TRANSLATION.........................................................v

INDUSTRY DATA...............................................................vi

TRADEMARKS..................................................................vi

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION..................vi

Item 1.     Identity of Directors, Senior Management and Advisers............1

Item 2.     Offer Statistics and Expected Timetable..........................1

Item 3.     Key Information..................................................1

Item 4.     Information on the Company......................................25

Item 5.     Operating and Financial Review and Prospects....................61

Item 6.     Directors, Senior Management and Employees......................95

Item 7.     Major Shareholders and Related Party Transactions..............106

Item 8.     Financial Information..........................................115

Item 9.     The Offer and Listing..........................................121

Item 10.    Additional Information.........................................129

Item 11.    Quantitative and Qualitative Disclosures About Market Risk.....151

Item 12.    Description of Securities Other than Equity Securities.........155

Item 13.    Defaults, Dividend Arrearages and Delinquencies................156

Item 14.    Material Modifications to the Rights of Security Holders and
            Use of Proceeds................................................156

Item 15.    Disclosure Controls and Procedures.............................156

Item 16.    Reserved.......................................................156

Item 17.    Financial Statements...........................................157

Item 18.    Financial Statements...........................................157

Item 19.    Exhibits and Certifications....................................158

Signatures  ...............................................................161


<PAGE>


                                 INTRODUCTION

      This annual report on Form 20-F relates to the two classes of registered
American Depositary Shares (ADSs) of Companhia de Bebidas das AMERICAS -
AmBev evidenced by American Depositary Receipts (ADRs) representing 100
preferred shares of AmBev and ADSs evidenced by ADRs representing 100 common
shares of AmBev and the U.S.$500,000,000 10 1/2% notes due 2011 of Companhia
Brasileira de Bebidas (CBB) guaranteed by AmBev (the notes).

      In this annual report, except as otherwise indicated or as the context
otherwise requires, the "Company", "AmBev", "we", "us" and "our" refers to
Companhia de Bebidas das AMERICAS - AmBev and its subsidiaries.


                           BACKGROUND ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

      Companhia de Bebidas das AMERICAS - AmBev was incorporated as Aditus
Participacoes S.A. (Aditus) on September 14, 1998. AmBev is a publicly
held corporation, incorporated under the laws of the Federative Republic of
Brazil. Prior to July 1, 1999, it had no operations. On July 1, 1999, the
controlling shareholders of Companhia Cervejaria Brahma (Brahma) and Companhia
Antarctica Paulista Industria Brasileira de Bebidas e Conexos (Antarctica),
both Brazilian corporations, contributed all of their common and preferred
shares in Brahma and Antarctica in exchange for shares of the same type and
class of AmBev (the controlling shareholders' contribution). AmBev's principal
executive offices are located at Rua Dr. Renato Paes de Barros, 1017, 4th
floor, CEP 04530-001, Sao Paulo, SP, Brazil, Tel.: (55-11) 2122-1200,
e-mail: ir@ambev.com.br.

      AmBev is the successor of Brahma. Brahma was founded in 1888 as Villiger
& Cia., and was one of the oldest brewers in Brazil. The Brahma brand was
registered on September 6, 1888, and in 1904 Villiger & Cia. changed its name
to Companhia Cervejaria Brahma.

      On March 31, 2001, Brahma was merged into Antarctica, and Antarctica
changed its name to Companhia Brasileira de Bebidas. This transaction had no
effect on AmBev's financial statements as each of the entities was wholly-owned
by AmBev. The transaction permitted AmBev to optimize the future use of tax
loss carryforwards.

      AmBev and CBB are both Brazilian sociedades anonimas.

THE COMBINATION

      AmBev was formed through the combination of Brazil's two largest beverage
companies, Brahma and Antarctica (the combination). The combination involved
the formation of AmBev, as a holding company for Brahma and Antarctica. The
combination was effected over the course of 1999 and 2000, beginning with the
contribution of shares of the controlling shareholders of Brahma and Antarctica
in exchange for shares of AmBev on July 1, 1999, and followed by the
consummation of transactions by which Antarctica and Brahma became wholly-owned
subsidiaries of AmBev on September 15, 1999 and September 14, 2000,
respectively, and the public shareholders of Brahma and Antarctica became
shareholders of AmBev.

      Pursuant to the controlling shareholders' contribution on July 1, 1999,
Brahma's controlling shareholders, Empresa de Administracao e Participacoes
S.A. - ECAP (ECAP) and Braco S.A. (Braco), and Antarctica's controlling
shareholder, Fundacao Antonio e Helena Zerrenner Instituicao
Nacional de


                                     -i-


<PAGE>


Beneficencia (FAHZ), contributed all of their common and preferred shares in
Brahma and Antarctica in exchange for AmBev shares of the same type and class.

      On July 1, 1999, the FAHZ, Braco, and ECAP, the controlling shareholders
of AmBev, as well as AmBev and Marcel Telles, Jorge Paulo Lemann and Carlos
Alberto Sicupira, entered into a shareholders' agreement that contains
provisions relating to the voting of shares of AmBev and the voting by AmBev of
the shares of its subsidiaries. Messrs. Telles, Lemann and Sicupira are
indirectly the controlling shareholders of Braco, which, in turn, owns 99.74%
of the voting shares of ECAP. For a detailed description of the AmBev
shareholders' agreement, see "Major Shareholders and Related Party
Transactions-Major Shareholders-AmBev Shareholders' Agreement".

      On March 31, 2001, Brahma was merged into Antarctica, and Antarctica
changed its name to Companhia Brasileira de Bebidas. This transaction had no
effect on AmBev's consolidated financial statements because each of the
entities was wholly-owned by AmBev. CBB is AmBev's principal operating
subsidiary.

BRAZILIAN ANTITRUST APPROVAL

      Brazilian antitrust authorities have the power to investigate any
transaction that results in the concentration of a market share equal to or
greater than 20% of any relevant market or which involves, among other factors,
any company with annual gross sales of R$400 million or more. The transfer of
control of Brahma and Antarctica to AmBev through the controlling shareholders'
contribution resulted in a market share for AmBev in excess of 70% of the
Brazilian beer market and 20% of the Brazilian soft drinks market. Brazilian
antitrust authorities therefore reviewed the transaction to determine whether
it would negatively impact competitive conditions in the relevant markets, or
whether it would negatively affect consumers.

      The Conselho Administrativo de Defesa Economica (CADE), an independent
agency of the Brazilian Ministry of Justice, is the principal Brazilian
antitrust authority. On July 14, 1999, CADE issued an interim order in
connection with the controlling shareholders' contribution that placed
temporary limits on the actions of Brahma and Antarctica relating to their
integration. On April 7, 2000, CADE approved the controlling shareholders'
contribution subject to restrictions designed to prevent AmBev from exercising
excessive control over the Brazilian beer market. CADE imposed no restrictions
in connection with soft drinks or other beverages produced by AmBev. On April
19, 2000, AmBev entered into a performance agreement with CADE pursuant to
which AmBev agreed to comply with the restrictions imposed by CADE. The
principal terms of the performance agreement include:

      o     For a period of four years, we must share our distribution
            network with at least one regional Brazilian beer company, which
            cannot have a market share in excess of 5% of its respective
            regional market, in each of the five regions of Brazil as defined
            by CADE. This obligation is independent of our obligation to share
            our distribution network with the purchaser of Bavaria for a
            certain specified period of time (see below). We had to choose the
            companies through a public bidding process and had to select those
            that offered to pay us the highest distribution commissions. On
            September 10, 2001, after a public bidding process, we signed an
            agreement with Eduardo Bier Comercial de Produtos Alimenticios
            (Dado Bier), for the sharing of our distribution network;

      o     For a period of four years, if we decide to close or dispose of
            any of our beer plants, we must first offer such plant for sale in
            a public auction;

      o     For a period of five years, if we or any of our subsidiaries
            dismisses any employee as a result of the restructuring process
            relating to the combination and other than for cause, we


                                     -ii-


<PAGE>


            must attempt to place the employee in a new job, and provide the
            employee with retraining, as appropriate;

      o     We and our distributors cannot demand that points of sale operate
            on an exclusive basis, except where our investments and
            improvements are equivalent to a majority of the assets of the
            point of sale or such exclusivity is, in the opinion of the
            management of the point of sale, in their interest; and

      o     A requirement that we sell Antarctica's Bavaria brand and related
            assets. The principal requirements of the Bavaria sale, which have
            been completed, were as follows:

            (a)   the transfer, to a single purchaser holding no more than 5%
                  of the Brazilian beer market, of the Bavaria brand (including
                  the Bavaria Pilsen and Bavaria Premium brands) and five beer
                  plants;

            (b)   the sharing of our distribution network with the purchaser
                  for a period of six years, renewable for an additional
                  two-year period at the option of the purchaser. During the
                  initial four-year period, the purchaser will not have to pay
                  any commission for the use of our network, although it will
                  have to pay costs associated with freight and distributors'
                  commissions; and

            (c)   the maintenance prior to sale of specified minimum levels of
                  publicity and marketing expenditures relating to the Bavaria
                  brand, and the use of reasonable efforts to keep Bavaria's
                  market share at a minimum of 4.7% of the Brazilian beer
                  market.

      On November 6, 2000, we entered into an agreement with Molson Inc. for
the sale of Bavaria pursuant to the terms of our performance agreement with
CADE. Our agreement with Molson provided for an initial purchase price of
R$416.1 million, of which R$191.4 million was received at that time. The
remaining R$224.7 million was to be payable to us by Molson subject to the
Bavaria brand reaching certain market thresholds. Molson agreed to pay an
additional R$44.8 million for each 0.5% increase in market share achieved by
the Bavaria brand on a yearly basis during a five-year period, up to a maximum
additional payment of R$224.7 million. At the time of sale, Molson agreed to
purchase Bavaria at its then-current 4% market share. A minimum market share of
6.5%, in addition to intermediary targets, must be attained by 2005 to assure
receipt of the full contingent price of R$ 224.7 million. Because the targets
have not been met, we have not recorded in our financial statements any portion
of this additional consideration. CADE approved this agreement on December 13,
2000, and the sale was completed on December 20, 2000. Our affiliate Miranda
Correa, which owned one of the plants sold to Molson, received 5.8% of the
proceeds from the sale of the Bavaria brand.

      Non-compliance with any obligation under the performance agreement during
its five year term will trigger a minimum daily fine of R$5,320 per occurrence.
This daily fine can be increased up to a maximum of R$106,410 per occurrence
and may be assessed until such time as we comply with the specific obligation.
In the event of non-compliance, CADE may also appoint a judicial officer to
enforce compliance. CADE has the authority to revoke its approval of the
controlling shareholders' contribution and to file an administrative proceeding
against us if we do not comply with our obligations. CADE also has the general
authority to order other remedial measures as provided by law and as
established under the performance agreement.

      On April 30, 2002, Molson decided to terminate early the distribution
agreement signed at the time of the sale according to the CADE requirements
under the performance agreement in order to enter into a distribution agreement
with The Coca-Cola Company.


                                     -iii-


<PAGE>


      As of December 31, 2002 AmBev had transferred all assets and operations
related to the Bavaria brand to Molson, which included the production and ended
the distribution of the Bavaria brand in Brazil.

ACCOUNTING ASPECTS OF THE COMBINATION

      For information on certain accounting aspects of the combination, see
"Operating and Financial Review and Prospects-Accounting Aspects of the
Combination".

ACQUISITION OF INTEREST IN QUINSA

      On January 31, 2003, AmBev consummated its agreements to acquire an
interest in Quilmes Industrial (Quinsa), Societe Anonyme, the largest
Argentine brewer, and in Quilmes International (Bermuda) Ltd. (QIB), Quinsa's
controlled subsidiary. This transaction involved an initial acquisition of
40.475% of the economic interest in Quinsa. See "Information on the
Company-Acquisition of Interest in Quinsa". The purchase consideration of
R$1,717.6 million consisted of a cash payment of R$1,427.9 million and the
contribution of AmBev's brewery assets located in Argentina, Uruguay and
Paraguay with a book value (determined under accounting practices generally
accepted in Brazil) of R$289.7 million. This acquisition will grant AmBev
further access to the Argentine, Bolivian, Uruguayan and Paraguayan markets in
which Quilmes commands a dominant share, as well as to Quinsa's operations in
Chile. AmBev will also be able to distribute the Quilmes brands throughout
Brazil. A put and call option agreement is in place which may result in AmBev
acquiring an additional 373.5 million Class A shares  of Quinsa within the next
seven years if Beverage Associates (BAC) Corp. exercises its put option, or
thereafter if we exercise our call option, in either case in exchange for stock
of AmBev.

      The acquisition of our interest in Quinsa was also subject to the
approval of Brazilian and Argentine antitrust authorities. For more details of
the transaction, the Quilmes business and the antitrust restrictions, see
"Information on the Company-Acquisition of Interest in Quinsa".

      The accounting effects of the acquisition of our interest in Quinsa were
recognized in our financial statements for the first quarter of 2003, which
were filed with the Brazilian Securities Commission (CVM) on May 9, 2003. See
"Operating and Financial Review and Prospects-Accounting aspects of the
Acquisition of Interest in Quinsa" and "Operating and Financial Review and
Prospects-Future Impact of Quinsa".


                       ACCOUNTING PERIODS AND PRINCIPLES

      We have prepared our audited annual consolidated financial statements as
of December 31, 2002 and 2001 and 2000 for the three years ended December 31,
2002 in Brazilian reais in accordance with accounting practices generally
accepted in Brazil (Brazilian GAAP), which are based on Brazilian Corporate Law
(Law 6,404, as amended, Corporate Law), as applied by us in preparing our
statutory financial statements and annual report and accounts, which differ in
certain significant respects from accounting principles generally accepted in
the United States (U.S. GAAP). The audited financial statements included in
this annual report have been prepared in accordance with Brazilian GAAP and
include a reconciliation of net income and shareholders' equity to U.S. GAAP.
In addition to the reconciliation of these key balances, the financial
statements also include a discussion of the reconciling differences in
accounting principles and the presentation of the U.S. GAAP condensed balance
sheets and statement of operations in Brazilian reais. The financial
information contained in this annual report is in accordance with Brazilian
GAAP, except as otherwise noted.

      For the year ended December 31, 2000, we prepared consolidated financial
statements for AmBev using the U.S. dollar as the reporting currency and in
accordance with U.S. GAAP, under Statement of Financial Accounting Standards
(SFAS) No. 52, "Foreign Currency Translation", which we filed with the United
States Securities and Exchange Commission (SEC). However, since that time we
have changed the


                                     -iv-


<PAGE>


format of the financial statements that we file with the SEC to follow
Brazilian GAAP and to include in those financial statements a reconciliation
to U.S. GAAP, as permitted under SEC rules and regulations.

      We changed the presentation of our financial statements:

      o     to increase the transparency of the financial position and
            results of operations of our business, communicated to the
            marketplace by providing annual Brazilian Corporate Law financial
            statements to facilitate comparison with local quarterly reporting;

      o     to provide both presentations in one document through the
            inclusion of the Brazilian Corporate Law financial statements, the
            reconciliation to U.S. GAAP and the condensed balance sheets and
            statements of operations in accordance with U.S. GAAP providing a
            clear identification of the accounting differences; and

      o     to reflect our financial position and results of operations in
            Brazilian reais which is the primary currency in which the business
            operates avoiding the distortions of exchange rate variations
            during periods of exchange rate volatility when the reporting
            currency was the U.S. dollar.

      Prior to July 1, 1999, the date of the controlling shareholders'
contribution, AmBev had no material assets, liabilities or operations. AmBev
was created by the combination of Brahma and Antarctica on that date and was
accounted for as a merger under Brazilian GAAP. However, for purposes of
presenting the Brazilian GAAP and U.S. GAAP Selected Financial Data in this
annual report, AmBev was treated as the successor to Brahma. We have included
in the Selected Financial Data, for comparison purposes, the financial
information of the predecessor company, Brahma, for the years ended December
31, 1999 and 1998, which under Brazilian GAAP does not include the merger with
Antarctica.

      Percentages and some amounts in this annual report have been rounded for
ease of presentation. Any discrepancies between totals and the sums of the
amounts listed are due to rounding.


                             CURRENCY TRANSLATION

      In this annual report, references to "real", "reais" or "R$" are to the
Brazilian legal currency. References to "U.S. dollar" or "U.S.$" are to the
legal currency of the United States. We have translated some of the Brazilian
currency amounts contained in this annual report into U.S.dollars. We have used
rates to translate such amounts that are applicable to the periods concerned
and are in conjunction with the average and closing rates used in the
preparation of our financial statements, unless context otherwise requires. The
rates applicable are those disclosed by the Central Bank of Brazil (Central
Bank), at the applicable dates. The commercial market rate on June 16, 2003 was
R$2.8508 to U.S.$1.00. The U.S.dollar equivalent information presented in this
annual report is provided solely for the convenience of the readers of this
annual report and should not be construed as implying that the Brazilian
currency amounts represent, or could have been or could be converted into, U.S.
dollars at such rates or at any rate. See "Key Information-Exchange Rate
Information-Exchange Controls" for more detailed information regarding the
translation of reais into U.S. dollars.


                                     -v-


<PAGE>


                                 INDUSTRY DATA

      In this annual report, we refer to information regarding the beverage
market and its segments and competitors from:

EUROMONITOR
Contact: Anne Nugent / Luka Erceg
60-61 Britton Street
London
EC1M5UX
Tel.: 44 (0) 20 7251 8024
www.euromonitor.com
http://www.euromonitor.com

ACNIELSEN
Contact: Marcio Garotti
Rua Monte Castelo, 55
Granja Viana
Cotia - Sao Paulo
CEP 06710-675
Tel.: 55 11 4613 7000
www.acnielsen.com.br
http://www.acnielsen.com.br

PEPSICO
Contact: Vasco Luce
Rua Verbo Divino, 1661 - 7o. andar
Sao Paulo - SP
CEP 04719 002
Tel.: 55 11 2122 1288
www.pepsi.com
http://www.pepsi.com
www.pepsi.com.br
http://www.pepsi.com.br


                                  TRADEMARKS

      This annual report includes names of our products which constitute
trademarks or trade names which we own or which are owned by others and are
licensed to us for our use. This annual report also contains other brand names,
trade names, trademarks or service marks of other companies, and these brand
names, trade names, trademarks or service marks are the property of those other
companies.


                        CAUTIONARY STATEMENT REGARDING
                          FORWARD-LOOKING INFORMATION

      We make forward-looking statements in this annual report that are subject
to risks and uncertainties. These statements are based on the beliefs and
assumptions of our management, and on information currently available to us.
Forward-looking statements include statements regarding the intent, belief or
current expectations of AmBev or its directors or executive officers with
respect to, but not limited to:

      o     the declaration or payment of dividends;

      o     the direction of future operations;

      o     the implementation of principal operating strategies, including
            existing, potential acquisition or joint venture transactions or
            other investment opportunities;


                                     -vi-


<PAGE>


      o     the implementation of AmBev's financing strategy and capital
            expenditure plans;

      o     the utilization of AmBev's subsidiaries' income tax losses;

      o     the factors or trends affecting AmBev's financial condition,
            liquidity or results of operations;

      o     the implementation of the measures required under AmBev's
            performance agreement entered into with CADE; and

      o     the implementation of the measures required by Argentina's
            Comision Nacional de Defensa de la Competencia (CNDC) under
            AmBev's agreements with BAC and Quinsa.

      Forward-looking statements also include information concerning possible
or assumed future results of operations of AmBev set forth under "Information
on the Company - Business Overview" and "Financial Information" as well as
statements preceded by, followed by, or that include, the words "believes",
"may", "will", "continues", "expects", "anticipates", "intends", "plans",
"estimates" or similar expressions.

      Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions because they relate to future
events and therefore depend on circumstances that may or may not occur in the
future. The future results and shareholder values of AmBev may differ
materially from those expressed in or suggested by these forward-looking
statements. Many of the factors that will determine these results and values
are beyond our ability to control or predict. Investors are cautioned not to
put undue reliance on any forward-looking statements.

      Investors should understand that the following important factors, in
addition to those discussed in this annual report, could affect the future
results of AmBev and could cause results to differ materially from those
expressed in such forward-looking statements:

      o     general economic conditions in the principal geographic markets
            of AmBev, such as the rates of economic growth, fluctuations in
            exchange rates or inflation;

      o     governmental intervention, resulting in changes to the economic,
            tax or regulatory environment in Brazil or other countries in which
            we operate;

      o     industry conditions, such as the strength of product demand, the
            intensity of competition, pricing pressures, the introduction of
            new products by AmBev, the introduction of new products by
            competitors, changes in technology or in the ability of AmBev to
            obtain products and equipment from suppliers without interruption
            and at reasonable prices, and the financial conditions of the
            customers and distributors of AmBev; and

      o     operating factors, such as the continued success of sales,
            manufacturing and distribution activities of AmBev and the
            consequent achievement of efficiencies.


                                    -vii-


<PAGE>

                                    PART I

Identity of Directors, Senior Management and Advisers

Not Applicable.

Offer Statistics and Expected Timetable

Not Applicable.

Key Information


                        AMBEV'S SELECTED FINANCIAL DATA

      The following financial information of AmBev and Brahma is only a summary
and should be read in conjunction with, and is qualified in its entirety by
reference to, the audited annual consolidated financial statements of AmBev and
Brahma and the related notes which are included in this annual report.

      Our selected historical financial data prepared under Brazilian GAAP and
U.S. GAAP set forth below as of and for each of the years ended December 31,
2002, 2001, 2000, 1999 and 1998 have been derived from AmBev's consolidated
financial statements as of and for the periods ended December 31, 2002, 2001
and 2000, and Brahma's consolidated financial statements as of and for the
periods ended December 31, 1999 and 1998, all of which have been audited by
PricewaterhouseCoopers Auditores Independentes, Sao Paulo, Brazil, Brazilian
independent accountants. Brazilian GAAP differs in significant respects from
U.S. GAAP and you should read the financial information in conjunction with our
audited financial statements, as well as "Operating and Financial Review and
Prospects".

      During the year ended December 31, 2002, CBB completed an exchange offer
of the U.S.$ 500 million 10 1/2% notes due 2011, in the U.S. securities
markets. AmBev fully and unconditionally guaranteed this issuance. Financial
information relating to CBB has not been included within the Selected Financial
Data, but full consolidating schedules disclosing the balance sheets,
statements of operations and statements of cash flow as of December 31, 2002
and 2001 and for each of the years ended December 31, 2002, 2001 and 2000,
under Brazilian GAAP, have been included in note 23 to our audited financial
statements, contained within this document.


<PAGE>

                         STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
                                                                                   AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                                                                   ----------------------------------------
<S>                                                                          <C>       <C>         <C>       <C>       <C>

                                                                             2002(1)   2001(1)     2000(1)   1999(1)   1998(1)
                                                                             -------   -------     -------   -------   -------
                                                                              (R$ in millions, except for per share amounts,
                                                                                number of shares and other operating data)
BRAZILIAN GAAP

Statement of Operations Data:                                                         SUCCESSOR              |  PREDECESSOR
                                                                                      ---------              |  -----------
                                                                                                             |
Gross sales, before taxes, discounts and returns                           14,279.9    13,131.0    11,282.5  |   6,846.5   7,005.1
Net sales............                                                       7,325.3     6,525.6     5,250.4  |   3,248.3   3,155.7
Cost of sales........                                                      (3,341.7)   (3,366.2)   (2,843.7) |  (1,905.1) (1,799.7)
                                                                         ----------- ----------- ----------- | ---------- ---------
Gross profit.........                                                       3,983.6     3,159.4     2,406.7  |   1,343.2   1,356.0
                                                                                                             |
Selling and marketing                                                        (687.2)     (707.8)     (578.6) |    (350.7)   (488.4)
expenses.............                                                                                        |
Direct distribution expenses                                                 (537.4)     (467.8)     (337.0) |    (225.5)   (207.2)
General and administrative expenses(2)                                       (373.5)     (351.5)     (373.0) |    (206.9)   (239.6)
Depreciation  and amortization of deferred charges                           (334.6)     (256.5)     (202.3) |     (95.4)    (84.9)
                                                                         ----------- ----------- ----------- | ---------- ---------
                                                                            2,050.9     1,375.8       915.8  |     464.7     335.9
Provision for contingencies                                                  (123.7)      (33.9)     (269.2) |     (51.2)    117.7
Other operating income, net(4)                                                199.4       152.2         9.1  |      66.3       8.3
Financial income.....                                                       2,530.2       358.4       374.0  |     675.1     213.0
Financial expenses...                                                      (3,277.3)     (861.5)     (698.0) |    (804.4)   (346.4)
                                                                         ----------- ----------- ----------- | ---------- ---------
OPERATING INCOME (3) (4)                                                    1,379.5       991.0       331.7  |     350.5     328.5
Non-operating income (expense), net(4)                                        (72.1)        2.3        52.7  |     (19.9)     27.1
Income tax benefits (expense)                                                 280.6       (51.9)      405.4  |      17.6     (34.4)
Income before equity in affiliates, profit sharing and minority interest    1,588.0       941.4       789.8  |     348.1     312.2
Profit sharing and contributions                                             (125.0)     (157.1)      (53.7) |     (39.9)     (3.2)
Minority interest....                                                          47.3         0.3      (265.9) |      14.0      11.1
                                                                         ----------- ----------- ----------- | ---------- ---------
NET INCOME...........                                                       1,510.3       784.6       470.2  |     322.3     329.1
                                                                         ----------- ----------- ----------- | ---------- ---------
                                                                         ----------- ----------- ----------- | ---------- ---------
                                                                                                             |
Net income per 1,000 shares (excluding treasury shares) at year end(5)        39.49       20.31       12.19  |     46.66     47.85
Net income per ADS(6) at                                                       0.39        0.20        0.12  |      2.33      2.39
year end.............                                                                                        |
Dividends and interest attributable to shareholder's equity per 1,000 shares                                 |
  (excluding treasury shares)(5)(7) (8) (9)                                                                  |
   Common shares.....                                                         12.40        7.17        8.00  |     20.65     16.80
   Preferred shares..                                                         13.64        7.89        8.37  |     22.70     18.45
Number of shares outstanding at year end, excluding treasury shares (in                                      |
  thousands) (8)                                                                                             |
   Common shares.....                                                    15,694,772  15,801,482   15,946,84  | 2,628,451 2,635,679
   Preferred shares..                                                    22,551,143  22,819,443  22,616,017  | 4,279,160 4,242,075
</TABLE>


                                      2


<PAGE>

<TABLE>
<CAPTION>
                                                                                    AS OF OR FOR THE YEAR ENDED DECEMBER 31,
<S>                                                                           <C>        <C>        <C>        <C>      <C>

                                                                              2002(1)   2001(1)   2000(1)   1999(1)   1998(1)
                                                                              -------   -------   -------   -------   -------
                                                                                 (R$ in millions, except for per share amounts,
                                                                                   number of shares and other operating data)
U.S. GAAP

Statement of Operations Data:                                                    SUCCESSOR                 |        PREDECESSOR
                                                                                 ---------                 |        -----------
                                                                                                           |
Net income (loss)....                                                 1,642.2          840.1     879.2     |    (173.7)      113.3
Net income per 1,000 shares (weighted average)(5)(10)(11)                                                  |
   - Basic                                                                                                 |
      Common shares..                                                   45.05          22.84     22.91     |     (5.60)       3.16
      Preferred shares                                                  49.55          25.13     25.20     |     (5.04)       3.47
   - Diluted                                                                                               |
      Common shares..                                                   44.69          22.55     22.05     |     (5.37)       3.00
      Preferred shares                                                  49.16          24.80     24.26     |     (4.83)       3.30
Net income (loss) per ADS(6)                                                                               |
   - Basic                                                                                                 |
      Common shares..                                                    0.45           0.23      0.23     |     (0.05)       0.03
      Preferred shares                                                   0.50           0.25      0.25     |     (0.05)       0.03
   - Diluted                                                                                               |
      Common shares..                                                    0.45           0.23      0.22     |     (0.05)       0.03
      Preferred shares                                                   0.49           0.25      0.24     |     (0.05)       0.03
Dividends and interest attributable to shareholders                                                        |
equity per 1,000 shares (weighted average)(5)(7)(9)                                                        |
   - Basic                                                                                                 |
      Common shares..                                                   13.78           9.15      7.60     |       5.06       3.38
      Preferred shares                                                  15.18          10.07      8.37     |       5.56       3.72
   - Diluted                                                                                               |
      Common shares..                                                   13.66           9.03      7.32     |       4.84       3.21
      Preferred shares                                                  15.03           9.94      8.05     |       5.32       3.53
Weighted average number of shares (thousands)(5)(10)(11)(12)                                               |
   - Basic                                                                                                 |
      Common shares..                                                 12,061,783    12,061,783  14,265,323 | 11,949,367  11,983,100
      Preferred shares                                                22,173,257    22,291,120  21,919,724 | 21,173,565  21,733,635
   - Diluted                                                                                               |
      Common shares..                                                 12,061,783    12,258,788  14,475,271 | 12,206,392  12,433,243
      Preferred shares                                                22,441,742    22,726,632  23,090,525 | 22,384,145  23,058,784
</TABLE>


                                      3


<PAGE>


                              BALANCE SHEET DATA

<TABLE>
<CAPTION>
                                                                 AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                                      --------------------------------------------------------------
<S>                                                       <C>             <C>          <C>        <C>         <C>
                                                         2002(1)        2001(1)       2000(1)    1999(1)     1998(1)
                                                      -----------     ----------    ----------  ---------   --------
                                                               (R$ in millions, except for per share amounts,
                                                                  number of shares and other operating data)
BRAZILIAN GAAP
                                                                       SUCCESSOR               |        PREDECESSOR
                                                      --------------------------------------   |  -----------------------
Balance Sheet Data:                                                                            |
Cash, cash equivalents and short term investments.....   3,504.9        2,562.9      1,028.3   |     1,697.4     1,081.0
Total current assets..................................   5,593.6        4,684.9      2,687.6   |     2,723.1     1,959.2
Investments...........................................     637.3          662.6        659.6   |        61.2        38.4
Property, plant and equipment, net....................   3,289.1        3,277.7      3,204.3   |     1,898.6     2,116.0
Goodwill and intangible assets, net...................     626.9          617.6        614.8   |        24.0        26.8
Deferred income tax-non-current.......................   1,558.3        1,160.3        996.1   |       240.8       134.2
Total assets..........................................  12,381.4       11,028.8      8,639.7   |     5,425.9     4,669.3
Short-term debt(13)...................................     607.4        1,720.0      1,265.3   |     1,042.9       898.8
Total current liabilities.............................   2,833.6        3,412.0      2,699.6   |     1,889.1     1,573.1
Long-term debt(14)....................................   3,879.3        2,849.4        927.6   |       938.7       981.2
Accrued liability for legal proceedings...............   1,014.9          815.5        878.0   |       288.6       255.2
Sales tax deferrals and other tax credits(15).........     803.0          746.8        650.6   |       569.6       436.0
Post-retirement benefits(16)..........................      53.4           55.6                |
Prepaid pension benefit cost(16)......................      21.6           20.8                |
Total long-term liabilities...........................   5,339.0        4,164.4      2,350.6   |     1,872.7     1,617.3
Minority interest.....................................      79.2           88.9        512.5   |        57.7        50.5
Shareholders' equity..................................   4,129.6        3,363.5      3,077.0   |     1,606.4     1,428.4
                                                                                               |
U.S. GAAP                                                                                      |
                                                                                               |
Total assets..........................................  11,584.6       10,195.9      7,743.0   |     3,109.7     4,727.8
Shareholders' equity..................................   3,960.6        2,839.9      2,378.2   |     1,628.7     1,417.9
</TABLE>

                                      4


<PAGE>
                                  OTHER DATA

<TABLE>
<CAPTION>
                                                          AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                               --------------------------------------------------------------------------
<S>                                                <C>             <C>            <C>              <C>              <C>
                                                  2002(1)        2001(1)         2000(1)        1999(1)           1998(1)
                                               -----------     ----------      ----------      ---------         --------
                                                        (R$ in millions, except for per share amounts,
                                                           number of shares and other operating data)
BRAZILIAN GAAP
                                                                SUCCESSOR                    |            PREDECESSOR
                                               -------------------------------------------   |     --------------------------
                                                                                             |
Other Financial Information:                                                                 |
                                                                                             |
Net working capital(17)                          2,760.0         1,272.9          (12.0)     |         834.0          386.1
Cash dividends paid(7)                             335.6           313.4           221.1     |         178.2          121.2
Depreciation and amortization of                                                             |
deferred charges (18)                              659.5           613.9           589.2     |         438.1          330.8
Capital expenditures(19)                           522.3           446.8           295.0     |         312.4          411.2
Operating cash flows-generated(20)               2,743.1         1,332.5         1,243.2     |       1,103.0
Investing cash                                    (545.1)         (949.6)         (100.7)    |        (299.2)
flows-used(20).......                                                                        |
Financing cash flows-                           (2,912.2)         1,418.0       (2,065.7)    |        (187.4)
generated-used(20)...                                                                        |
Adjusted EBITDA(21)..                            2,710.4         1,989.8         1,505.0     |         902.7
                                                                                             |
                                                                                             |
Other Operating Data:                                                                        |
                                                                                             |
Total production capacity-               89.7 million hl 89.8 million hl 94.4 million hl     |    64.4 million hl  62.0 million hl
beer(22).............                                                                        |
Total production capacity-soft drink(22) 37.3 million hl 38.8 million hl 36.6 million hl     |    27.0 million hl  27.0 million hl
Total beer volume sold(23)               62.0 million hl 62.4 million hl 64.8 million hl     |    43.2 million hl  42.5 million hl
Total soft drink volume sold(23)         18.2 million hl 18.5 million hl 17.2 million hl     |     8.5 million hl   2.1 million hl
Number of employees(24)                           18,570          18,136          18,172     |              9,416           10,708
Productivity (%)(25).                              78.1%           75.6%                     |
</TABLE>

FOOTNOTES TO SELECTED FINANCIAL INFORMATION

(1)   Brahma and Antarctica were legally merged to form AmBev on July 1, 1999
      under Brazilian GAAP. However, for purposes of this annual report, as
      AmBev was treated as the successor to Brahma for accounting purposes,
      financial information of AmBev, the successor, have been included as of
      and for the three years ended December 31, 2002. The selected financial
      information in all previous periods has been derived from the audited
      financial statements of the predecessor company, Brahma.

(2)   General and administrative expenses include director's fees.

(3)   Operating income under Brazilian GAAP is presented after financial
      income and financial expense.

(4)   The 2000 and 2001 statements of operations have been reclassified in
      line with the financial statements presented in 2002. This involved
      reclassifying tax recoveries from other non-operating income (expense),
      net to other operating income, net, totaling R$105.0 million and R$5.1
      million in 2001 and 2000, respectively. As a result, the operating
      income (expense) for those years mentioned is different from that
      disclosed in our 2001 annual report on Form 20-F.

(5)   The information is provided per thousand shares because AmBev common and
      preferred shares are generally traded on the Sao Paulo Stock Exchange in
      blocks of one thousand shares.

(6)   ADS represents American Depositary Shares. Each ADS represents 100
      shares.

(7)   Includes dividends, interest attributable to shareholders' equity
      (including withholding tax paid by AmBev in respect thereof), and in
      2000, returns of capital of R$111.8 million. Certain distributions in
      2000 were made in the form of a return of capital rather than in the
      form of dividends or interest attributable to shareholders' equity
      because, prior to the completion of the Brahma conversion, AmBev did not
      have sufficient retained earnings to pay these amounts as dividends or
      interest attributable to shareholders' equity. The dividend and interest
      attributable to shareholders equity per 1,000 shares for Brazilian GAAP
      purposes is calculated net of withholding tax and therefore represents
      the amounts received as disclosed in "Dividends". We changed the
      criteria for reporting this amount in 2002 and therefore the dividends
      per share disclosed in the years prior to 2002 do not conform to that
      disclosed in our 2001 annual report on Form 20-F.

(8)   Calculated as the total number of outstanding shares at year end less
      treasury shares in the parent company AmBev and in our subsidiary CBB.
      We have changed the criteria used to calculate this number in 2003,
      which will be reflected in our 2003 annual report on Form 20-F.


                                      5

<PAGE>


(9)   Brazilian GAAP and U.S. GAAP differ on the recognition of declared /
      proposed dividends, specifically with regard to when the dividend should
      be recognized. The executive officers are required to propose a dividend
      at year end, which is subject to ratification by the shareholders at a
      general meeting and must be recognized under Brazilian GAAP. However,
      under U.S. GAAP, the proposed dividends may be modified or ratified by
      the shareholders at a general meeting and are treated as a deduction
      from shareholders' equity.

(10)  In the U.S. GAAP selected financial information only, all share and per
      share data have been adjusted to give effect, retroactively, to AmBev's
      five-for-one split of its common and preferred shares effective October
      23, 2000. Because AmBev did not split its ADSs, the ADSs, which prior to
      the stock split had represented 20 common or preferred shares,
      represented 100 common or preferred shares following the stock split. In
      the Brazilian GAAP selected financial information, the historic share
      and per share information has not been adjusted and therefore reflects
      the actual number of shares in issue.

(11)  In the U.S. GAAP selected financial information only, earnings per share
      are calculated dividing the net income by the weighted average number of
      common and preferred shares outstanding during the relevant periods. In
      the Brazilian GAAP selected financial information section, earnings per
      share are calculated by dividing by the number of shares outstanding at
      the year end. AmBev's preferred shares are entitled to dividends 10%
      greater than the dividends paid to common shares.

(12)  Under U.S. GAAP we have consolidated the net assets of the FAHZ, one of
      our major shareholders, on our balance sheet as of December 31, 2002,
      2001 and 2000. As a result of our consolidating these net assets, AmBev
      shares owned by the FAHZ are treated as treasury shares, rather than
      outstanding shares, thereby reducing the number of our weighted average
      outstanding shares and increasing our earnings or loss per share. For
      the purposes of the predecessor company, Brahma, the Brahma Welfare
      Foundation was treated in a similar manner, resulting in a similar
      effect in the selected financial information as at and for the years
      ended December 31, 1999 and 1998. For further information, please refer
      to our consolidated financial statements contained within this annual
      report.

(13)  Includes current portion of long-term debt.

(14)  Excludes current portion of long-term debt.

(15)  In the financial statements as of and for the year end December 31,
      2002, total tax incentives are R$803.0 million, of which R$ 461.0
      million relate to deferred sales tax, and R$ 342.0 million to ICMS
      financing incentives.

(16)  Consistent with current accounting practice under Brazilian GAAP, we had
      not recognized our actuarial obligation for pension liabilities and
      post-retirement benefits, including medical benefits to retirees in our
      financial statements prior to December 31, 2001. Pension amounts due to
      the pension plan were treated on an accrual basis as the obligations
      fell due. However, following the issuance of a new accounting standard
      (NPC No. 26), we are required to record these actuarial obligations
      beginning in 2002. We had the option to account for these actuarial
      obligations at December 31, 2001 either against retained earnings or
      prospectively as a charge against earnings over five years. We elected
      to recognize the liability against retained earnings on December 31,
      2001. The standard requires comprehensive recording of pension expenses
      and obligations on an actuarial basis instead of, as was previously
      required, based on the required contributions for the relevant year. For
      purposes of U.S. GAAP, the pension expense has been treated as a payroll
      expense from the first year presented.

(17)  Represents total current assets less total current liabilities.


(18)  Includes depreciation of property, plant and equipment and amortization
      of deferred charges.

(19)  Represents cash expenditures for property, plan and equipment.

(20)  Operating, Investing and Financing cash flows data is derived from our
      financial statements included herewith. This information is not
      available for the year ended December 31, 1998.

(21)  Adjusted EBITDA represents earnings before interest, tax, depreciation
      and amortization. Adjusted EBITDA is not a measurement of and does not
      represent cash flow for the periods presented and should not be
      considered as an alternative to operating income (loss), as an indicator
      of our operating performance or as an alternative to cash flows as a
      source of liquidity. Our definition of EBITDA may not be comparable with
      EBITDA as defined by other companies. Although adjusted EBITDA, as
      defined above, does not provide a Brazilian GAAP measure of operating
      cash flows, our management uses it to measure our operating performance
      and it is commonly used by financial analysts in evaluating our
      business. Adjusted EBITDA is calculated under Brazilian GAAP as follows:



                                               YEARS ENDED DECEMBER 31,
                                           2002    2001      2000      1999
                                                  (R$ in millions)
Operating Income........................ 1,379.5   991.0     331.7    350.4
Depreciation and
  amortization of deferred charges.....    659.5   613.9     589.2    438.1
Contingencies expense..................    123.7    33.9     269.2     51.2
Other operating income, net............   (199.4) (152.2)     (9.1)   (66.3)
Financial income....................... (2,530.2) (358.4)   (374.0)  (675.1)
Financial expense......................  3,277.3   861.5     698.0    804.4
Adjusted EBITDA........................  2,710.4 1,989.7   1,505.0    902.7

(22)  Represents available production capacity of Brahma and its subsidiaries
      (and not Antarctica or its subsidiaries) at the end of each period
      ending on or before December 31, 1999, and thereafter represents the
      available production capacity of AmBev and its respective


                                      6


<PAGE>


      subsidiaries, domestic and international; (hl is the abbreviation for
      hectoliters).

(23)  Represents volumes of Brahma and its subsidiaries (and not Antarctica or
      its subsidiaries) for each period ending on or before December 31, 1999,
      and thereafter represents full-year volumes of AmBev and its respective
      subsidiaries.

(24)  Includes all production- and non-production-related employees of Brahma
      and its subsidiaries at the end of each period ending on or before
      December 31, 1999, and thereafter includes all production- and
      non-production-related employees of AmBev and its respective
      subsidiaries.

(25)  Calculated by dividing the liquid produced in one hour by the capacity
      of the production line employees in the same period. The information is
      not available for 1998, 1999 and 2000.


                                      7


<PAGE>


                                   DIVIDENDS

DIVIDEND POLICY

      AmBev intends to pay dividends twice a year to its shareholders; however,
the timing and amount of future dividend payments, if any, will depend upon
various factors the Board of Directors of AmBev considers relevant, including
the earnings and the financial condition of AmBev. AmBev's by-laws provide for
a mandatory dividend of 27.5% of its annual net income, if any, as determined
and adjusted under Brazilian GAAP (adjusted income). The mandatory dividend
includes amounts paid as interest attributable to shareholders' equity, which
is equivalent to a dividend but is a more tax efficient way to distribute
earnings because they are generally deductible by the company for Brazilian
income tax purposes. However, shareholders (including holders of ADSs) have to
pay Brazilian withholding tax on the amounts received as interest attributable
to shareholders' equity, whereas no such payment is required in connection with
dividends received. Withholding tax is usually paid by Brazilian companies,
including AmBev, on behalf of their shareholders.

      Adjusted income may be capitalized, used to absorb losses or otherwise
appropriated as allowed under Brazilian Corporate Law; therefore, any adjusted
income may no longer be available to be paid as dividends. AmBev may also not
pay dividends to its shareholders in any particular fiscal year, upon the
determination by the Board of Directors that such distributions would be
inadvisable in view of AmBev's financial condition. Any such dividends not
distributed would be allocated to a special reserve account for future payment
to shareholders, unless it is used to offset subsequent losses. See-"Risk
Factors-Factors Relating to our Securities-AmBev shareholders may not receive
any dividends". Any dividends payable on AmBev's preferred shares must be 10%
greater than those payable on AmBev's common shares. See "Additional
Information-Memorandum and Articles of Association-Reserves and
Dividends-Dividend Preference of Preferred Shares".

      For further information on Brazilian Corporate Law provisions relating to
required reserves and payment of dividends on interest attributable to
shareholders'  equity, as well as specific rules applicable to the payment of
dividends by AmBev, see "Additional Information-Memorandum and Articles of
Association-Reserves and Dividends".



AMBEV-DIVIDENDS AND INTEREST ATTRIBUTABLE TO SHAREHOLDERS' EQUITY

      The following table shows the dividends paid by AmBev's predecessor
Brahma, to its preferred and common shareholders from 1996 through
September 15, 2000, and by AmBev to its preferred and common shareholders since
September 15, 2000 in reais and in U.S. dollars translated from Brazilian reais
at the commercial exchange rate as of the date of payment. The amounts include
interest attributable to shareholders' equity, net of withholding tax, and
return of capital. See "Additional Information-Memorandum and Articles of
Association-Interest Attributable to Shareholders' Equity".


                                      8


<PAGE>


<TABLE>
<CAPTION>
<S>                                                     <C>                        <C>              <C>
                                                                                Reais per          U.S. dollar equivalent
                                                                                thousand(1)        per thousand(1) shares
Earnings generated                                  First payment date           shares(2)          at a payment date(4)
------------------                                  ------------------         --------------    ---------------------------

First half 1996..................                   September 26, 1996             0.91           (preferred and common)   0.89
Second half 1996..................                  March 21, 1997                 1.27           (preferred and common)   1.20
First half 1997..................                   October 9, 1997                1.61           (preferred)              1.47
                                                                                   1.46           (common)                 1.33

Second half 1997..................                  May 7, 1998                    1.73           (preferred)              1.51
                                                                                   1.57           (common)                 1.37

First half 1998..................                   October 8, 1998                1.32           (preferred)              1.12
                                                                                   1.20           (common)                 1.01

Second half 1998..................                  April 5, 1999                  2.37           (preferred)              1.37
                                                                                   2.16           (common)                 1.25

First half 1999..................                   July 20, 1999                  1.58           (preferred)              0.88
                                                                                   1.44           (common)                 0.80

Second half 1999..................                  March 15, 2000                 2.96           (preferred)              1.70
                                                                                   2.69           (common)                 1.54

Extraordinary(3)..................                  March 23, 2000                 1.88           (preferred)              1.09
                                                                                   1.88           (common)                 1.09

Extraordinary(3)..................                  November 30, 2000              2.38           (preferred)              1.22
                                                                                   2.38           (common)                 1.22

Second half 2000..................                  February 20, 2001              4.11           (preferred)              2.05
                                                                                   3.74           (common)                 1.86

First half 2001..................                   September 17, 2001             3.11           (preferred)              1.16
                                                                                   2.83           (common)                 1.06

Second half 2001..................                  February 19, 2002              4.78           (preferred)              1.97
                                                                                   4.34           (common)                 1.79

First half 2002..................                   November 25, 2002              4.37           (preferred)              1.15
                                                                                   3.97           (common)                 1.04

Second half 2002..................                  February 28, 2003              9.27           (preferred)              2.60
                                                                                   8.43           (common)                 2.37
---------------------
(1)   The information is provided per thousand shares because AmBev common and
      preferred shares are generally traded on the Sao Paulo Stock Exchange in
      blocks of one thousand.

(2)   The amounts set forth above are amounts actually received (as adjusted to
      give effect retroactively to AmBev's common and preferred share
      five-for-one stock split effective October 23, 2000) by shareholders,
      which are net of withholding tax. The amounts set forth here represent
      pro-forma U.S. GAAP calculations for the impact of a stock split which
      is not required under Brazilian GAAP. The financial statements present
      the amounts actually disbursed, including the withholding tax on
      interest on shareholders' equity, which was paid on behalf of its
      shareholders. The dividends per thousand shares set forth above are
      calculated based on the number of shares outstanding at the date the
      distributions were declared (as adjusted to give effect retroactively to
      AmBev's common and preferred share five-for-one stock split effective
      October 23, 2000).

(3)   On March 23, 2000 and on November 30, 2000 AmBev distributed R$1.88 (U.S.
      $1.09) per common and preferred shares and R$2.38 (U.S. $1.22) per
      common and preferred shares, respectively, to its shareholders as a
      return of capital.

(4)   Translated to U.S. dollars at the exchange rate in effect at the date
      declared.
</TABLE>


                                     9


<PAGE>


                           EXCHANGE RATE INFORMATION

      There are two principal foreign exchange markets in Brazil:

      o     the commercial rate exchange market; and

      o     the floating rate exchange market.

      On February 1, 1999, the Central Bank authorized the unification of the
exchange positions of the Brazilian financial institutions in the commercial
rate exchange market and floating rate exchange market, which led to a
convergence in the pricing and liquidity of both markets. The Brazilian
government also allowed an increase in the exchange positions of institutions
authorized to trade foreign currency to provide further liquidity to the
foreign exchange markets. Most trade and financial transactions are carried out
on the commercial rate exchange market. The floating market rate generally
applies to transactions to which the commercial market rate does not apply.
Foreign currencies may only be purchased through a Brazilian financial
institution authorized to operate in these markets. In both markets, rates are
freely negotiated but may be strongly influenced by Central Bank intervention.

RECENT HISTORY OF THE BRAZILIAN REAL

      Responding to pressure on the real, the Central Bank widened the foreign
exchange rate band on January 15, 1999 and allowed the real to float freely.
The real devalued to a low for that year of R$2.165 per U.S. $1.00 on March 3,
1999, but subsequently appreciated to R$1.789 per U.S. $1.00 on December 31,
1999, representing a net devaluation against the U.S. dollar of 32.4% during
1999. In 2000, the real devalued by a further 8.5% against the U.S. dollar.

      Further deterioration in the political and economic environment in 2001,
in addition to the Brazilian energy crisis, resulted in the real devaluing by
15.7% against the U.S. dollar in the year. In the final quarter of 2001,
however, the real actually appreciated by 15.1% from R$2.671 per U.S. $1.00 at
September 30, 2001 to R$2.3204 per U.S.$1.00 at December 31, 2001.

      In 2002, as a reaction to political and economic uncertainties, the
global economic downturn, the crisis in Argentina and the Brazilian
presidential elections, the U.S. dollar appreciated  by 34.33% against the real
to R$3.5333 per U.S.$1.00 at December 31, 2002. While the real has recovered in
the first five and one-half months of 2003, appreciating by 23.9% to June 16,
2003 at R$2.8508 per U.S.$1.00, no assurance can be given that the real will
not devalue further in the future. See "- Risk Factors-Factors Related to
Brazil-Economic uncertainty and volatility in Brazil impacts our business".

      The following tables set forth commercial market rates for the purchase
of U.S. dollars for the periods indicated.

<TABLE>
<CAPTION>
                           ANNUAL EXCHANGE RATES OF REAIS PER U.S.$1.00
                           --------------------------------------------
<S>                         <C>          <C>          <C>       <C>         <C>
                             2002        2001        2000       1999        1998
                             ----        ----        ----       ----        ----

Low........................R$2.2709    R$1.9357    R$1.7234    R$1.2078    R$1.1165
High.......................3.9552      2.8007      1.9847      2.1647      1.2087
Average(1).................2.9983      2.3532      1.8348      1.8514      1.1644
Period End.................3.5333      2.3204      1.9554      1.7890      1.2087
</TABLE>

Source:  Central Bank of Brazil

(1)Represents the average of the month-end exchange rates during the relevant
   period.


                                     10


<PAGE>


<TABLE>
<CAPTION>
                        2003 MONTHLY EXCHANGE RATES OF REAIS PER U.S.$1.00
                        --------------------------------------------------
<S>                    <C>          <C>         <C>         <C>        <C>         <C>
                                                 2003                                2002
                         MAY        APRIL       MARCH       FEBRUARY   JANUARY     DECEMBER
                         ---        -----       -----       --------   -------     --------

Low....................R$2.8653     R$2.8898    R$3.3531    R$3.4832    R$3.2758    R$3.4278
High...................3.0277       3.3359      3.5637      3.6580      3.6623      3.7980
</TABLE>

Source:  Central Bank of Brazil

      The commercial market rate for the purchase of U.S. dollars as at
June 16, 2003 was R$2.8508 per U.S. dollar.

      Brazilian law provides that, whenever there is a serious imbalance in
Brazil's balance of payments or serious reasons to expect such an imbalance,
temporary restrictions may be imposed on remittances of foreign capital abroad.
No assurance can be given that temporary restrictions will not be imposed by
the Brazilian government in the future. See-"Risk Factors-Factors relating to
Brazil and Other Countries in Which We Operate-The Brazilian government has
exercised, and continues to exercise, significant influence over the Brazilian
economy. Brazilian economic and political conditions have a direct impact on
our business".

      We will pay any cash dividends and make any other cash distributions in
reais. Accordingly, exchange rate fluctuations may affect the U.S. dollar
amounts received by the holders of ADSs on conversion by the depositary of such
distributions into U.S. dollars for payment to holders of ADSs. Fluctuations in
the exchange rate between the real and the U.S. dollar may also affect the U.S.
dollar equivalent of real price of our shares on the Sao Paulo Stock
Exchange. See-"Risk Factors-Factors relating to our securities".


                               EXCHANGE CONTROLS

      There are no restrictions on ownership of the ADSs or the preferred or
common shares by individuals or legal entities domiciled outside of Brazil.

      The right to convert dividend payments, interest attributable to
shareholders' equity payments and proceeds from the sale of preferred or common
shares into foreign currency and to remit such amounts outside Brazil is
subject to exchange control restrictions and foreign investment legislation
which generally requires, among other things, that the relevant investments be
registered with the Central Bank. Restrictions on the remittance of foreign
capital abroad could hinder or prevent Banco Itau S.A. (the custodian) or
holders who have exchanged AmBev's ADSs for shares of AmBev, from converting
dividend distributions, interest on shareholders' equity or the proceeds from
any sale of shares of AmBev into U.S. dollars and remitting such U.S. dollars
abroad. Holders of AmBev ADSs could be adversely affected by delays in or
refusal to grant any required governmental approval for conversions of real
payments and remittances abroad.

      Under Brazilian law relating to foreign investment in the Brazilian
capital markets (Foreign Investment Regulations), foreign investors registered
with the CVM and acting through authorized custody accounts managed by local
agents may buy and sell shares on Brazilian stock exchanges without obtaining
separate certificates of registration for each transaction. Foreign investors
may register their investment under Law 4,131/62 or Resolution No. 2,689/00 of
the National Monetary Council.

      Under Resolution No. 2,689, foreign investors may invest in almost all
financial assets and engage in almost all transactions available in the
Brazilian financial and capital markets, provided that certain requirements are
fulfilled. In accordance with Resolution No. 2,689, the definition of foreign
investor


                                      11


<PAGE>


includes individuals, legal entities, mutual funds and other collective
investment entities, domiciled or headquartered abroad.

      Under Resolution No. 2,689, a foreign investor must:

      o     appoint at least one representative in Brazil, with powers to
            perform actions relating to its investment;

      o     appoint an authorized custodian in Brazil for its investments;

      o     register as a foreign investor with the CVM; and

      o     register its foreign investment with the Central Bank.

      Securities and other financial assets held by a Resolution No. 2,689
investor must be registered or maintained in deposit accounts or under the
custody of an entity duly licensed by the Brazilian Central Bank or the CVM. In
addition, any transfer of securities held under Resolution No. 2,689 must be
carried out in the stock exchanges or through organized over-the-counter
markets licensed by the CVM, except for transfers resulting from a corporate
reorganization, occurring upon the death of an investor by operation of law or
will or as a consequence of the delisting of the relevant shares from a stock
exchange and the cancellation of the registration with the CVM.

      Pursuant to the certificates of registration obtained by AmBev from the
Central Bank in the name of the Bank of New York with respect to the AmBev ADSs
to be maintained by the custodian (Banco Itau S.A. ) on behalf of the Bank
of New York, the custodian and The Bank of New York will be able to convert
dividends and other distributions with respect to the AmBev shares represented
by AmBev ADSs into foreign currency and remit the proceeds outside of Brazil.
In the event that a holder of AmBev ADSs exchanges such ADSs for AmBev shares
such holder will be entitled to continue to rely on The Bank of New York's
certificate of registration for only five business days after such exchange,
after which such holder must obtain its own certificate of registration. Any
such holder may not be able to obtain and remit abroad U.S. dollars or other
hard currencies upon the disposition of the shares or distributions with
respect to such disposition, unless such holder qualifies under the Foreign
Investment Regulations or obtains its own certificate of registration, and such
holder generally will be subject to less favorable Brazilian tax treatment than
a holder of AmBev ADSs. See "Additional Information- Taxation-Brazilian Tax
Considerations".

      Under current legislation, the Brazilian government may impose temporary
restrictions on remittances of foreign capital abroad in the event of a serious
imbalance or an anticipated serious imbalance of Brazil's balance of payments.
For approximately six months in 1989 and early 1990, the Brazilian government
froze all dividend and capital repatriations held by the Central Bank that were
owed to foreign equity investors in order to conserve Brazil's foreign currency
reserves. These amounts were subsequently released in accordance with Brazilian
government directives. We can not assure you that the Brazilian government will
not impose similar restrictions on foreign repatriations in the future. See
"-Risk Factors-Factors Relating to Our Securities-Controls and restrictions on
foreign currency remittance could harm the ability of AmBev to transfer
dividends payments to off-share investors".


                                      12


<PAGE>


                                 RISK FACTORS

      Investors, holders and prospective purchasers of securities of AmBev
should, in addition to paying due regard to the Cautionary Statement Regarding
Forward-Looking Information, also carefully consider all of the information set
forth in this annual report. In particular, you should consider the special
features applicable to an investment in Brazil and applicable to an investment
in AmBev, including those set forth below. In general, investing in the
securities of issuers in emerging market countries, such as Brazil, involves a
higher degree of risk than investing in the securities of issuers in the United
States.

      For purposes of this section, when we state that a risk, uncertainty or
problem may, could or would have an "adverse effect" on AmBev, we mean that the
risk, uncertainty or problem may, could or would have an adverse effect on the
business, financial condition, liquidity, results of operations or prospects of
AmBev, except as otherwise indicated or as the context may otherwise require.
You should view similar expressions in this section as having similar meanings.

FACTORS RELATING TO AMBEV

      WE ARE SUBJECT TO BRAZILIAN AND OTHER ANTITRUST REGULATIONS.

      We have a substantial beer market share in Brazil and thus are subject to
regulation under Brazilian antitrust rules. In addition, in connection with the
combination of Brahma and Antarctica, we entered into a performance agreement
with the Brazilian antitrust authorities, pursuant to which we are subject to
certain continuing restrictions over our distribution network. See "Background
on the Company-Brazilian Antitrust Approval". We are also party to several
antitrust legal proceedings. See "Financial Information-Legal
Proceedings-Antitrust Matters". We cannot assure you that Brazilian antitrust
regulation will not affect our business in the future.

      AmBev's participation in the Argentine beer market has increased after
the acquisition of our interest in Quinsa. Quinsa is subject to regulation
under Argentinean antitrust rules. In addition, AmBev and Quinsa must comply
with the conditions established by CNDC, in connection with the acquisition of
our interest in Quinsa. See "Information on the Company-Acquisition of Interest
in Quinsa". We cannot assure you that Argentine antitrust regulation will not
affect Quinsa's business in the future and therefore impact the benefits that
AmBev anticipates will be generated from its investment.

      INCREASES IN TAXES ON BEVERAGE PRODUCTS IN BRAZIL MAY AFFECT OUR RESULTS
      AND PROFITABILITY.

      Increases in Brazil's already high levels of taxation could adversely
affect our profitability. Increases in taxes on beverage products usually
result in higher beverage prices for consumers. Higher beverage prices
generally result in lower levels of consumption and, therefore, lower net
sales. Lower net sales result in lower margins because some of our costs are
fixed and thus do not vary significantly based on the level of production. We
cannot assure you that the government will not increase current tax levels,
both state and federal, and that this will not impact our business.

FACTORS RELATING TO BRAZIL AND OTHER COUNTRIES IN WHICH WE OPERATE

      ECONOMIC UNCERTAINTY AND VOLATILITY IN BRAZIL MAY ADVERSELY AFFECT OUR
      BUSINESS.

      The Brazilian government's actions to maintain economic stability, as
well as public speculation about possible future actions, may contribute
significantly to economic uncertainty in Brazil and to heightened volatility in
the Brazilian securities markets and securities issued abroad by Brazilian
issuers.


                                      13


<PAGE>


      Our principal market is Brazil, which has periodically experienced
extremely high rates of inflation. Inflation, along with governmental measures
to combat inflation and public speculation about possible future measures, has
had significant negative effects on the Brazilian economy. The annual rates of
inflation, as measured by the National Consumer Price Index (indice Nacional
de Precos ao Consumidor), have decreased from 2,489.1% in 1993 to 5.3% in
2000. The same index increased to 9.4% during 2001, 14.7% in 2002 and 7.9% in
the period to May 30, 2003.

      Brazil may experience high levels of inflation in the future. There can
be no assurance that recent lower levels of inflation will continue. Future
governmental actions, including actions to adjust the value of the real, may
trigger increases in inflation. We cannot assure you that inflation will not
affect our business in the future.

      The Brazilian currency has devalued periodically during the last four
decades. Throughout this period, the Brazilian government has implemented
various economic plans and utilized a number of exchange rate policies,
including sudden devaluations and periodic mini-devaluations, during which the
frequency of adjustments has ranged from daily to monthly, floating exchange
rate systems, exchange controls and dual exchange rate markets. There have been
significant fluctuations in the exchange rates between Brazilian currency and
the U.S. dollar and other currencies. For example, the U.S. dollar/real
exchange rate depreciated from R$1.9554 per U.S.$1.00 at December 31, 2000 to
R$2.3204 at December 31, 2001 and to R$3.5333 at December 31, 2002. The fear of
exchange controls accelerated the pace of capital flight. The exchange rate
reached R$3.9552 per U.S.$1.00 in October 2002. However, the stability
established by the economic policy initiated by the new government has restored
some confidence in the market. This has resulted in an appreciation of 23.9% to
the exchange rate of R$2.8508 per U.S.$1.00 as at June 16, 2003. We cannot
assure you, however, that devaluations will not impact our business in the
future.

      Devaluation of the real relative to the U.S. dollar would create
additional inflationary pressures in Brazil by generally increasing the price
of imported products and requiring recessionary governmental policies to curb
aggregate demand. On the other hand, appreciation of the real against the U.S.
dollar may lead to a deterioration of the current account and the balance of
payments, as well as dampen export-driven growth. The potential impact of the
floating exchange rate and of measures of the Brazilian government aimed at
stabilizing the real is uncertain. In addition, a substantial increase in
inflation may weaken investor confidence in Brazil, impacting our ability to
finance our operations through the international capital markets.

      CONTINUED DECLINES IN THE VALUE OF THE REAL AGAINST THE VALUE OF THE U.S.
DOLLAR HAS AND MAY CONTINUE TO ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.

      Substantially, all of our net sales are in reais, however, a significant
portion of our debt is denominated in or indexed to U.S. dollars. In addition,
a significant portion of our operating expenses, in particular those related to
packaging such as cans and PET, as well as hops and malt are also denominated
in or linked to U.S. dollars. Therefore, the devaluation of the real increases
our financial expenses and operating costs and could affect our ability to meet
our foreign currency obligations. Our current policy is to hedge substantially
all of our dollar-denominated debt against adverse changes in foreign exchange
rates; however, we cannot assure you that such hedging will be possible at all
times in the future.

      NEW POLITICAL AND ECONOMIC POLICIES MAY AFFECT OUR BUSINESS.

      The presidential elections dominated Brazilian politics and economics
during 2002. On October 29, 2002, Luiz Inacio Lula da Silva (Lula) was
elected President of Brazil with 61.3% of valid votes, defeating Jose Serra,
the then incumbent President Fernando Henrique Cardoso's candidate. President
Lula led the opinion polls throughout the entire year and his left-wing
political origins had


                                      14


<PAGE>


created market concerns about the continuation of economic stability. On
January 1, 2003, Lula took office as the new President of Brazil. There can be
no certainty whether the economic policies of the former President Cardoso
administration will be continued by the current administration of the
Brazilian government or what policies the current administration will adopt.
At this time, President Lula's administration has not made any fundamental
policy change which has had a materially detrimental impact on the Brazilian
economy or our business.

      THE ECONOMIC CRISIS IN ARGENTINA COULD ADVERSELY AFFECT THE BRAZILIAN
ECONOMY

      Since the end of 1998, the Argentine economy has been in a recession
marked by significantly reduced levels of consumption and investments,
increasing unemployment and declining gross domestic product. The lack of
confidence in Argentina's economic future led to massive withdrawals of bank
deposits from the country. To prevent a further run on the dollar reserves of
local banks, on December 1, 2001, the Argentine government effectively froze
bank deposits and introduced exchange controls restricting capital outflows.
These measures, known as the "corralito", have precipitated a political and
social crisis that has significantly impaired economic activity since December
2001.

      In addition, the economic crisis has given rise to increasing political
volatility. Protests and looting throughout Argentina led to the resignation of
President Fernando de la Rua on December 21, 2001, and since then, Argentina
has had five presidents. With some limitations, President Duhalde's
administration has allowed the exchange rate of the Argentine peso to float,
breaking the currency's traditional par value to the U.S. dollar, and resulting
in the devaluation of the Argentine peso against the U.S. dollar by 64.5% in
the period from December 31, 2001 to June 16, 2003. Presidential elections were
held on May 2003 and Mr. Nestor Kirchner was elected. Mr. Kirchner took
office on May 25, 2003. We cannot predict the effect that the policies of Mr.
Kirchner's administration may have on the Argentine economic conditions.

      These recent events have added to the perception of higher risk for
investments in Argentina, and Latin America generally, which may discourage
international investment in the region. In addition, as a result of the
acquisition of our interest in Quinsa, and the financial conditions and results
of operations of Quinsa may be adversely affected by Argentine political
instability, fluctuations in the Argentine economy and governmental actions
concerning the economy, which could cause AmBev not to realize the benefits it
currently expects to realize from the acquisition. Further, the continuation of
the Argentine recession and the recent devaluation of the peso could adversely
affect the Brazilian economy, as Argentina is one of Brazil's principal trading
partners. Adverse developments in the Brazilian economy could, in turn,
negatively impact our business.

      Finally, the Argentine recession may adversely affect the Brazilian
securities markets which are, to varying degrees, influenced by economic and
market conditions in other emerging market countries, such as Argentina.

      QUINSA IS SUBJECT TO SUBSTANTIAL RISKS RELATING TO ITS BUSINESS AND
OPERATIONS IN ARGENTINA AND OTHER COUNTRIES IN WHICH WE IT OPERATES.

      On January 31, 2003, we acquired a significant interest in Quinsa. Quinsa
is a brewing company with a substantial portion of its operations in Argentina.
As a result, Quinsa's financial conditions and results of operations may be
adversely affected by Argentine political instability, fluctuations in the
Argentine economy and governmental actions concerning economy, including:

         o     the imposition of exchange controls;

         o     the devaluation of the Argentine Peso; and


                                      15


<PAGE>


         o     other measures enacted by the Argentine government to address
               Argentina's economic crisis.

      If one or more of the risks described above were to materialize, AmBev
may not be able to realize the benefits that it currently intends to realize
from the acquisition of its interest in Quinsa, and that development might
negatively impact AmBev.

      U.S. INVESTORS MAY NOT BE ABLE TO EFFECT SERVICE OF PROCESS UPON, OR TO
ENFORCE JUDGMENTS AGAINST, US.

      We are organized under the laws of the Federative Republic of Brazil. All
our directors and executive officers and the experts named in this annual
report are residents of countries other than the United States. All or a
substantial portion of the assets of such non-resident persons and of AmBev are
located outside the United States. As a result, it may not be possible for
investors to effect service of process within the United States upon such
persons or AmBev, or to enforce against them in U.S. courts judgments obtained
in such courts based upon civil liability provisions of the Federal securities
laws of the United States or otherwise.

      THE BRAZILIAN GOVERNMENT HAS EXERCISED, AND CONTINUES TO EXERCISE,
SIGNIFICANT INFLUENCE OVER THE BRAZILIAN ECONOMY. BRAZILIAN ECONOMIC AND
POLITICAL CONDITIONS HAVE A DIRECT IMPACT ON OUR BUSINESS.

      The Brazilian economy has been characterized by significant involvement
on the part of the Brazilian government, which often changes monetary, credit
and other policies to influence Brazil's economy. The Brazilian government's
actions to control inflation and affect other policies have often involved wage
and price controls, the Central Bank's base interest rates, as well as other
measures, such as the freezing of bank accounts, which occurred in 1990.

      Actions taken by the Brazilian government concerning the economy may have
important effects on Brazilian corporations and other entities, including
AmBev, and on market conditions and prices of Brazilian securities. Our
financial condition and results of operations may be adversely affected by the
following factors and the Brazilian government's response to the following
factors:

         o     devaluations and other exchange rate movements;

         o     inflation;

         o     exchange control policies;

         o     social instability;

         o     price instability;

         o     energy shortages;

         o     interest rates;

         o     liquidity of domestic capital and lending markets;

         o     tax policy; and


                                      16


<PAGE>


         o     other political, diplomatic, social and economic developments in
               or affecting Brazil.

      In addition, we cannot predict the effect that the policies of President
Lula's administration, which took office in January 2003, may have on Brazilian
economic conditions or on our results of operations.

      THE PENDING TAX REFORM IN BRAZIL MAY INCREASE OUR TAX BURDEN.

      On April 30, 2003, President Lula submitted to Congress a bill proposing
a constitutional amendment aimed at a broad tax reform. The bill is mainly
designed to simplify the complex Brazilian fiscal system, reduce tax evasion
and the public deficit.

      The bill proposes to eliminate the cascading nature of federal taxes and
broaden the discussion for the tax reform. President Lula pledged to put all
his efforts to have the tax reform be voted on by Congress in 2003.

      One of the most important changes in the tax reform proposal is to unify
the legislation on the value-added tax on sales and services (ICMS), and to
establish five standard tax rates. In addition, the CPMF, a provisional levy on
bank account transactions, would be replaced by a permanent federal tax on
financial transfers. The effects of these changes and many other changes that
could result from the enactment of additional tax reforms cannot be quantified.
These changes, however, may reduce our results of operations, increase our
costs or limit our profitability, and we may have a higher tax burden if the
tax reform bill is approved and implemented.

      THE PROPOSED CHANGES IN BRAZILIAN LABOR LAW MAY AFFECT LABOR RELATIONS.

      On April of 2003, the Lower House reopened the discussions regarding the
changes in the Brazilian Labor Law. On December 5, 2001, the House of
Representatives approved a bill which proposed amendments to the Brazilian
labor law (Consolidacao das Leis do Trabalho, or CLT). However, under the
new government, the proposal was withdrawn from the Senate and new efforts to
implement a revision of the CLT were initiated. According to the system
currently in force, labor relations are strongly regulated. Although still
protecting fundamental labor rights, the committee in charge of the preparation
of a new bill has proposed to include more flexibility in the rules regulating
labor relations in Brazil, allowing for employers and employees to negotiate
certain aspects of the employment relations. A revision of union relations in
Brazil may also be discussed. It is not clear whether the proposed changes, if
approved by the Congress, would be well accepted by employees of Brazilian
companies, including AmBev, and their respective unions. These changes, if
implemented, may impact our business in the future.

      NEW PROPOSED REGULATION ON ALCOHOLIC BEVERAGES MAY ADVERSELY IMPACT OUR
SALES.

      There are approximately 90 bills under review by Congress with proposed
regulation on the consumption, sale and marketing of alcoholic beverages
(including beer). Such proposed legislation, if enacted, may impose
restrictions, among other things, on the advertisement of alcoholic beverage
products on television during specified periods of the day as well as on times
of operation of certain points of sale that sell our products. It is uncertain
whether such proposed legislation will be approved by Congress. However,
similar proposed legislation has been submitted to a number of state and city
councils in states in which we operate. In the event Congress or any such state
or city councils approve the proposed legislation, certain restrictions may
apply to our business throughout Brazil, or in certain states or cities within
Brazil, as the case may be. We cannot predict the effect that such anti-alcohol
regulations may have on our business. For further information, please refer to
"Regulation-General".

FACTORS RELATING TO OUR SECURITIES


                                      17


<PAGE>


      THE RELATIVE VOLATILITY AND ILLIQUIDITY OF THE BRAZILIAN SECURITIES
MARKETS MAY SUBSTANTIALLY LIMIT YOUR ABILITY TO SELL THE AMBEV SECURITIES AT
THE PRICE AND TIME YOU DESIRE.

      Investing in securities in emerging markets, such as Brazil, involves
greater risk than investing in securities of issuers from more developed
countries and such investments are generally considered speculative in nature.
Brazilian investments, such as investments in our securities, are subject to
economic and political risks, involving, among others:

         o     changes in the regulatory, tax, economic and political
               environment that may affect the ability of investors to receive
               payment, in whole or in part, in respect of their investments;
               and

         o     restrictions on foreign investment and on repatriation of
               capital invested.

      The Brazilian securities markets are substantially smaller, less liquid,
more concentrated and more volatile than major U.S. and European securities
markets, and are not as highly regulated or supervised as  these markets. The
relatively small market capitalization and illiquidity of the Brazilian
securities markets may substantially limit your ability to sell the AmBev
shares underlying the AmBev ADSs at the price and time you desire. See "The
Offer and Listing-Regulation of the Brazilian Securities Market".

      DEVELOPMENTS IN OTHER EMERGING MARKET COUNTRIES MAY AFFECT THE MARKET
PRICE OF AMBEV'S SECURITIES.

      Economic and market conditions in other emerging market countries,
especially those in Latin America, influence the market for securities issued
by Brazilian companies and investors' perception of economic conditions in
Brazil. Since the fourth quarter of 1997, the international financial markets
experienced significant volatility, and a large number of market indices,
including those in Brazil, declined significantly. For example, the Asian
economic crisis and the 1998 Russian debt moratorium and devaluation of the
Russian currency triggered securities market volatility in Brazil and other
emerging market countries' securities markets. More recently, Argentina has
experienced a financial crisis resulting from its difficulties in servicing its
large outstanding public debt. Venezuela, Uruguay and Paraguay have also
experienced a significant economic downturn. The market value of AmBev's
securities may therefore be adversely affected by events occurring outside of
Brazil, especially in other emerging market countries.

      OUR CONTROLLING SHAREHOLDERS ARE ABLE TO DETERMINE THE OUTCOME OF MANY
CORPORATE ACTIONS WITHOUT THE APPROVAL OF NON-CONTROLLING SHAREHOLDERS.

      The controlling shareholders of AmBev, ECAP, Braco and the FAHZ together
hold approximately 70.92% of AmBev's common shares. In addition, Marcel Hermann
Telles, Jorge Paulo Lemann and Carlos Alberto Sicupira, who are directors of
AmBev, collectively own, indirectly through S-Braco Participacoes S.A.
(S-Braco), an investment company indirectly controlled by Messrs. Telles,
Lemann and Sicupira, approximately 84.55% of the voting capital of Braco,
which, in turn, owns approximately 99.74% of the voting shares of ECAP. Braco
and ECAP together with S-Braco, hold approximately 52.45% of the voting common
shares of AmBev. Thus, these three directors of AmBev have significant
influence over AmBev, although several types of matters must be decided in
accordance with the AmBev shareholders' agreement. See "Major Shareholders and
Related Party Transactions-Major Shareholders-AmBev Shareholders' Agreement",
for a description of these matters.

      The controlling shareholders are able to elect the majority of the
members of the Board of Directors of AmBev and generally determine the outcome
of other actions requiring the approval of AmBev's shareholders. Under
Brazilian Corporate Law, the protections afforded to non-controlling


                                      18


<PAGE>


security holders and the fiduciary duties of directors may, in some respects,
be less comprehensive than in the United States or other jurisdictions.

      AMBEV SHAREHOLDERS MAY NOT RECEIVE ANY DIVIDENDS.

      According to its by-laws, AmBev must generally pay its shareholders 27.5%
of its annual net income, as determined and adjusted under Brazilian GAAP
(adjusted income). The main sources for these dividends are AmBev's operating
subsidiaries, principally CBB. Adjusted income may be capitalized, used to
absorb losses or otherwise appropriated as allowed under Brazilian GAAP;
therefore, adjusted income may no longer be available to be paid as dividends.
AmBev might not pay dividends to its shareholders in any particular fiscal
year, upon the determination of the Board of Directors that such distributions
would be inadvisable in view of AmBev's financial condition. While the law does
not establish the circumstances rendering the payment of dividends inadvisable,
it is generally agreed that a company need not pay dividends if such payment
threatens the existence of the company as a going concern or harms its normal
course of operations.

      It is therefore possible that shareholders of AmBev will not receive
dividends in any particular fiscal year. Any dividends not distributed would be
allocated to a special reserve account for future payment to shareholders,
unless it is used to offset subsequent losses.

      CONTROLS AND RESTRICTIONS ON FOREIGN CURRENCY REMITTANCE COULD HARM THE
ABILITY OF AMBEV TO TRANSFER DIVIDEND PAYMENTS TO OFF-SHORE INVESTORS.

      Brazilian law provides that whenever there is a serious imbalance in
Brazil's balance of payments or reasons to foresee a serious imbalance, the
Brazilian government may impose temporary restrictions on the remittance to
foreign investors of the proceeds of their investments in Brazil. For example,
for approximately six months in 1989 and early 1990 the Brazilian government
froze all dividend and capital repatriations that were owed to foreign equity
investors and held by the Central Bank in order to conserve Brazil's foreign
currency reserves. These amounts were subsequently released in accordance with
Brazilian government directives. Similar measures could be taken by the
Brazilian government in the future.

      As a result, the Brazilian government may in the future restrict
companies such as AmBev from paying amounts denominated in foreign currencies
(such as dividends) or require that any such payments be made in Brazilian
reais. The likelihood that the Brazilian government would impose such
restrictions may be affected by the extent of Brazil's foreign currency
reserves, the availability of foreign currency in the foreign exchange markets
on the date a payment is due, the size of Brazil's debt service burden relative
to the economy as a whole, Brazil's policy toward the International Monetary
Fund and other factors. We cannot assure you that the Central Bank will not
modify its policies or that the Brazilian government will not institute
restrictions or delays on payments by Brazilians issuers in respect of
securities issued in the international capital markets to date. For more
information regarding exchange controls see "-Exchange Controls".

      IF YOU EXCHANGE THE AMBEV ADSS FOR AMBEV SHARES, YOU RISK LOSING SOME
FOREIGN CURRENCY REMITTANCE AND BRAZILIAN TAX ADVANTAGES.

      The AmBev ADSs benefit from the certificate of foreign capital
registration of The Bank of New York (as depositary) in Brazil, which permits
The Bank of New York to convert dividends and other distributions with respect
to the AmBev shares into foreign currency and remit the proceeds abroad. If you
exchange your AmBev ADSs for AmBev shares, you will be entitled to rely on The
Bank of New York's certificate of foreign capital registration for only five
business days from the date of exchange. After this five-day period, you will
not be able to remit abroad non-Brazilian currency unless you obtain your own


                                      19


<PAGE>


certificate of foreign capital registration or you qualify under Brazilian
foreign investment regulations that entitle some investors to buy and sell
shares on Brazilian stock exchanges without obtaining separate certificates of
registration. If you do not qualify under the foreign investment regulations
you will generally be subject to less favorable tax treatment of dividends and
distributions on, and the proceeds from any sale of, the AmBev shares. For a
more complete description of Brazilian restrictions on foreign investments and
the foreign investment regulations, see "Additional Information-Memorandum and
Articles of Association-Restrictions on Foreign Investment" and

      "-Exchange Controls". For a more complete description of Brazilian tax
regulations, see "Additional Information-Taxation-Brazilian Tax
Considerations".

      THE AMBEV ADSS HAVE FEWER AND LESS WELL DEFINED SHAREHOLDERS' RIGHTS AS
COMPARED TO SHAREHOLDERS' RIGHTS OF SIMILAR U.S. COMPANIES.

      AmBev's corporate affairs are governed by AmBev's by-laws and Brazilian
Corporate Law, which may differ from the legal principles that would apply to
AmBev if the company were incorporated in a jurisdiction in the United States,
such as Delaware or New York, or in other jurisdictions outside of Brazil. In
addition, your rights or the rights of holders of the AmBev shares and ADSs
under Brazilian Corporate Law to protect your interests relative to actions
taken by AmBev's Board of Directors or controlling shareholders may be fewer
and less well-defined than under the laws of those other jurisdictions outside
of Brazil.

      Although Brazilian law imposes restrictions on insider trading and price
manipulation, the Brazilian securities markets may not be as highly regulated
and supervised as the U.S. securities markets or markets in other
jurisdictions. In addition, rules and policies against self-dealing and
regarding the preservation of shareholder interests may be less well-defined
and enforced in Brazil than in the United States, potentially causing
disadvantages to holders of the AmBev shares and ADSs. Corporate disclosures
may be less complete or informative than what may be expected of a U.S. public
company.

      SOME ENTITLEMENTS ARE NOT AVAILABLE TO U.S. HOLDERS OF AMBEV SHARES AND
ADSS.

      Due to various Brazilian and United States laws and regulations, United
States holders of AmBev shares or ADSs may not be entitled to all of the rights
possessed by Brazilian holders of AmBev shares. For instance, U.S. holders of
AmBev shares may not be able to exercise any preemptive or preferential rights
relating to their shares unless a registration statement under the Securities
Act is effective with respect to such rights or an exemption from the
registration requirements thereunder is available.

FACTORS RELATING TO THE NOTES, THE GUARANTY AND THE INSURANCE POLICY

      POSSIBLE EXTENSION OF THE EXPECTED MATURITY OF THE NOTES.

      Under the terms of the U.S. $500 million 10 1/2% notes due 2011 and the
indenture under which the notes were issued, if, on the expected maturity date
for the notes, the insurance policy issued in respect of the notes and the
guaranty is in effect or certain funds are on deposit in the reserve account
and certain specified events have occurred and are continuing relating to the
imposition of currency exchange controls in Brazil, the date for the repayment
of the notes will automatically be extended until the earlier to occur of (i)
twenty-four calendar months from the expected maturity date; (ii) the latest
date for which funds are available in the reserve account or under the letter
of credit and under the insurance policy to pay interest on the notes; or (iii)
the thirtieth day after any such currency exchange control event has ended.
Accordingly, you should not rely, in making your investment decision, on
receiving repayment in full of the notes on the initial expected maturity date.


                                      20


<PAGE>


      Any such extension of the expected maturity date could, depending on
changes in the financial conditions of CBB, ultimately affect the ability of
the noteholders to receive all amounts due to them under the notes and the
indenture.

      POSSIBLE LIMITATIONS OF AMBEV'S OBLIGATIONS UNDER THE GUARANTY.

      AmBev entered into a guaranty in support of CBB's obligation under the
notes and the indenture. Our obligation to guarantee the payment of amounts of
principal, interest or other amounts due under the notes and the indenture
applies, subject to some limitations, irrespective of whether any such amounts
are due at maturity of the notes or otherwise.

      AmBev has the right under certain limited circumstances to defer making
payments required under the guaranty for a period of up to twenty-four months.
In such event, noteholders will be required to wait until the end of such
deferral or suspension period to receive payment on the notes. We cannot assure
you that AmBev will not experience financial difficulties during such period or
whether at the end of such period that it will be able to make any or all
required payments under the guaranty.

      JUDGMENTS OF BRAZILIAN COURTS ENFORCING OUR OBLIGATIONS UNDER THE NOTES,
THE INDENTURE OR THE GUARANTY WOULD BE PAYABLE ONLY IN REAIS.

      If proceedings were brought in Brazil seeking to enforce our obligations
under the notes, the indenture, or the guaranty, we would not be required to
discharge our obligations in a currency other than reais. Under the Brazilian
exchange control limitations, an obligation to pay amounts denominated in a
currency other than Brazilian currency, which is payable in Brazil, may be
satisfied in Brazilian currency at the rate of exchange, as determined by the
Central Bank, in effect on the date of payment.

      A FINDING THAT THE GUARANTY EXECUTED BY AMBEV WAS A FRAUDULENT CONVEYANCE
COULD RESULT IN NOTEHOLDERS LOSING THEIR LEGAL CLAIM AGAINST AMBEV.

      CBB's obligation to make payments on the notes is supported by AmBev's
obligation under the guaranty to guarantee payments by CBB on the notes. AmBev
has been advised by its United States counsel that the guaranty is valid and
enforceable in accordance with the laws of the State of New York. AmBev has
been advised by its general counsel that the guaranty has been duly authorized
under the laws of Brazil and is valid, binding and enforceable against AmBev in
accordance with its terms. The obligations of AmBev under the guaranty could be
avoided, or claims in respect of the guaranty could be subordinated to the
claims of the creditors, in the event that U.S. Federal or state fraudulent
conveyance or similar laws are applied to the guaranty, and the guarantor, at
the time it entered into the guaranty:

         o     was or is insolvent or rendered insolvent by reason of its
               entry into the guaranty;

         o     was or is engaged in business or transactions for which the
               assets remaining with AmBev constituted unreasonably small
               capital; or

         o     intended or intends to incur, or believed or believes that it
               would incur, debts beyond its ability to pay such debts as they
               mature; and

         o     received or receives less than reasonably equivalent value or
               fair consideration.

      Among other things, a legal challenge to the guaranty on fraudulent
conveyance grounds may focus on the benefits, if any, realized by AmBev as a
result of CBB's issuance of the notes. To the extent that the guaranty is held
to be a fraudulent conveyance or unenforceable for any other reason, the
holders of the notes would not have a claim against AmBev under the guaranty
and will solely have a claim


                                      21


<PAGE>


against CBB. We cannot assure you that, after providing for all prior claims,
there will be sufficient assets to satisfy the claims of the noteholders
relating to any avoided portion of the guaranty.

      CONTROLS AND RESTRICTIONS ON FOREIGN CURRENCY REMITTANCE COULD IMPEDE OUR
ABILITY TO MAKE PAYMENTS UNDER THE NOTES AND THE GUARANTY.

      Brazilian law provides that whenever there is a serious imbalance in
Brazil's balance of payments or reasons to foresee a serious imbalance, the
Brazilian government may impose temporary restrictions on the remittance to
foreign investors of the proceeds of their investments in Brazil. For example,
for approximately six months in 1989 and early 1990 the Brazilian government
froze all dividend and capital repatriations that were owed to foreign equity
investors and held by the Central Bank in order to conserve Brazil's foreign
currency reserves. These amounts were subsequently released in accordance with
Brazilian government directives. Similar measures could be taken by the
Brazilian government in the future.

      As a result, the Brazilian government may in the future (i) restrict
companies such as CBB and AmBev from paying amounts denominated in foreign
currencies (such as the notes and the guaranty) or (ii) require that any such
payments be made in reais. The likelihood that the Brazilian government would
impose such restrictions may be affected by the extent of Brazil's foreign
currency reserves, the availability of foreign currency in the foreign exchange
markets on the date a payment is due, the size of Brazil's debt service burden
relative to the economy as a whole, Brazil's policy toward the International
Monetary Fund, and other factors. We cannot assure you that the Central Bank
will not modify its policies or that the Brazilian government will not
institute restrictions or delays on payments of external debt.

      The Brazilian government currently restricts the ability of Brazilian or
foreign persons or entities to convert Brazilian currency into U.S. dollars or
other currencies, other than in connection with certain authorized transactions
including, among others, timely payments by CBB on the notes and payments by
AmBev under the guaranty. We cannot assure you that mechanisms for the transfer
of reais and conversion into U.S. dollars will continue to be available at the
time we are required to perform our obligations under the notes and the
guaranty or that a more restrictive control policy, which could affect our
ability to make payments under the notes and the guaranty in U.S. dollars, will
not be instituted in the future. If such financial mechanisms are not
available, we will have to rely on a special authorization from the Central
Bank to make payments under the notes and the guaranty in U.S. dollars. We
cannot assure you that any such Central Bank approval would be obtained or that
such approval would be obtained on a timely basis.

      In the event that no such additional authorizations are obtained or
obtainable from the Central Bank for the payment by CBB or AmBev of amounts
owed under the indenture, the notes or the guaranty, as the case may be, CBB or
AmBev may be able to lawfully pay the amounts due under the notes or the
guaranty through an international transfer of reais. Through the international
transfer of reais mechanism, payments made in reais by CBB or AmBev will be
deposited in non-resident accounts held by foreign financial institutions,
which would then purchase U.S. dollars through the Brazilian floating currency
market and remit U.S. dollars to the relevant agent for payment of the notes.
See "*Exchange Rate Information" and "*Exchange Controls". No assurance can be
given that the international transfer of reais or the floating market will
remain legally or commercially available to Brazilian residents.

      As of February 1, 1999, the floating market and commercial market were
unified and Brazilian banks adopted the same rates, leading to a convergence in
the pricing and liquidity of both markets. Consequently, while there is still a
regulatory distinction between the two markets, as of the date of this
prospectus there is no practical distinction between the commercial market and
the floating market.


                                      22


<PAGE>


      BOOK-ENTRY REGISTRATION.

      Because transfers and pledges of global notes can be effected only
through book entries at DTC, the liquidity of any secondary market for global
notes may be reduced to the extent that some investors are unwilling to hold
notes in book entry form in the name of a DTC participant. The ability to
pledge global notes may be limited due to the lack of a physical certificate.
Beneficial owners of global notes may, in certain cases, experience delay in
the receipt of payments of principal and interest since such payments will be
forwarded by the paying agent to DTC who will then forward payment to the
respective DTC participants, who will thereafter forward payment directly, or
indirectly through Euroclear or Clearstream, to beneficial owners of the global
notes. In the event of the insolvency of DTC or of a DTC participant in whose
name global notes are recorded, the ability of beneficial owners to obtain
timely payment and (if the limits of applicable insurance coverage by the
Securities Investor Protection Corporation are exceeded, or if such coverage is
otherwise unavailable) ultimate payment of principal and interest on global
notes may be impaired.

      SUBORDINATION TO CERTAIN STATUTORY LIABILITIES.

      Under Brazilian law, AmBev's and CBB's respective obligations under the
guaranty, the notes and the indenture are subordinated to certain statutory
preferences. In the event of our bankruptcy, such statutory preferences, such
as claims for salaries, wages, social security and other taxes, court fees and
expenses, will have preference over any other claims, including claims by any
investor in respect of the guaranty.

      POSSIBLE VOLUNTARY CANCELLATION OF THE INSURANCE POLICY AND THE LETTER OF
CREDIT AND REFUNDING OF AMOUNTS ON DEPOSIT IN THE RESERVE ACCOUNT.

      Subject to certain conditions relating to the rating of the notes, CBB
may request the trustee to cancel the insurance policy, refund all amounts on
deposit in the reserve account and allow the letter of credit to be cancelled
after the third anniversary of the closing date. Any such cancellation and
withdrawal may significantly affect the ability of note holders to receive
payments under their notes during a currency exchange control event occurring
after any such cancellation, withdrawal and refund.

      LIMITED FINANCIAL INFORMATION CONCERNING THE INSURER.

      The rating of the notes is in part based on the availability of the
insurance policy to cover certain risks related to inconvertibility or non-
transferability of amounts which may be paid by CBB and AmBev under the
indenture, the notes and the guaranty in the event that the Brazilian
government imposes limitations on the conversion of reais to U.S. dollars. No
financial information concerning Steadfast Insurance Company, the insurer that
issued the insurance policy related to the notes, is included in this annual
report, but statutory financial statements are available from the Delaware
insurance authorities. The insurer's financial obligations are subject to
pooling arrangements with its parent and certain of its affiliates, which
arrangements depend on the financial condition of these entities. No financial
information concerning these entities is included herein. Any decline in the
financial condition of the insurer or any of these companies (including as a
result of events similar to those arising from the recent terrorist acts in the
United States, or any insolvency or similar proceedings) may impair the ability
of the insurer to pay claims under the insurance policy and could result in a
downgrade of the rating of the notes. Accordingly, you should take into account
the unavailability of information on the insurer, its parent and affiliates in
making a decision with respect to the notes.


                                      23


<PAGE>


      LIMITATION ON AMOUNT OF COVERAGE UNDER THE INSURANCE POLICY.

      The insurance policy has a policy payment limit in U.S. dollars which
corresponds to the amount of scheduled interest due on the notes for twelve
months. Combined with the amounts on deposit in a reserve account or available
under the letter of credit, the amounts available to the trustee from the
insurance policy should be sufficient to cover the payment of interest due on
the notes for up to four interest payment periods. If for any reason any
currency exchange control event were to continue for a period longer than
twenty-four months (four consecutive interest payment periods) during which
time CBB or AmBev would otherwise be required to make payments to the trustee
on behalf of the noteholders under the notes or the guaranty, a default may
occur on the notes. In such cases, noteholders may, in certain circumstances be
required to accept reais in satisfaction of the CBB's and AmBev's obligation to
make payments to the trustee under the notes and the guaranty regardless of
whether such reais are then convertible into U.S. dollars or any other
currency.

      CONDITIONAL NATURE OF THE INSURER'S OBLIGATION TO PAY UNDER THE INSURANCE
POLICY.

      The insurer's obligation to make payments under the insurance policy is
subject to certain conditions, limitations and exclusions including, but not
limited to:

         o     the requirement that CBB or AmBev either attempt and fail to
               convert reais to U.S. dollars or attempt and fail to transfer
               U.S. dollars from Brazil to the trustee in New York;

         o     certain events causing the failure of CBB to pay under the
               indenture or AmBev to pay under the guaranty, as the case may
               be, continuing for the entire 180-day waiting period under the
               insurance policy;

         o     the filing by the trustee, as the insured party under the
               insurance policy, of a claim with the insurer; and

         o     the provision of certain information by the trustee, CBB and
               AmBev to the insurer within the time periods proscribed by the
               insurance policy in connection with the filing of the claim
               with the insurer.

      The failure to satisfy any such condition, if not waived by the insurer,
may result in the insurer not being obligated to make any payment on the
insurance policy.

      In addition, the insurer may in certain circumstances cancel the
insurance policy, exclude the payment of a claim thereunder and adjust the
amount of a claim under the insurance policy.

      LIMITATION ON TIMING OF PAYMENTS UNDER THE INSURANCE POLICY.

      The insurance policy requires that the insurer make payments in respect
of a claim thereunder 180 days after the original payment schedule for
principal of, and interest on, the notes. Accordingly, in the event of an
acceleration of the notes prior to the maturity thereof during certain events,
the insurer will not be obligated to make such payments in the event of any
such acceleration.


                                      24


<PAGE>


Information on the Company


                     BRAZILIAN BEVERAGE INDUSTRY OVERVIEW

      THE MARKET

      Brazil has a current population of approximately 176 million and
3.3 million square miles of territory. According to the Brazilian Institute of
Geography and Statistics (IBGE), the Brazilian economy grew by 1.5% in 2002.
The Brazilian beer market is the fourth largest in the world and the largest in
Latin America, with annual consumption of 85 million hectoliters in 2002,
according to Euromonitor. The Brazilian soft drinks market, with 117 million
hectoliters of consumption in 2001, is the third largest in the world according
to PepsiCo1. According to the IBGE, the Brazilian market has a large and
youthful consumer base, with 35% of the Brazilian population under the age of
18. These factors, together with the effects of an unequal regional income
distribution presents significant opportunities for growth in the Brazilian
beverage market.

      POLITICAL AND ECONOMIC ENVIRONMENT

      The political and economic environment in Brazil has and will continue to
have a significant effect on the profitability of Brazilian beverage producers.
The Brazilian economy experienced rapid growth immediately following the
introduction of the Real Plan in July 1994, particularly in the consumer
sector. The Real Plan succeeded in lowering inflation and stimulating growth.
However, by late 1998, the Brazilian economy's growth had slowed, and was
aggravated by a significant currency devaluation in January 1999. Gross
domestic product (GDP) grew at rates of only 0.1% and 0.8% in 1998 and 1999,
respectively. The economic slowdown resulted in generally flat demand in the
Brazilian beverage industry from 1996 through 1999. Renewed consumer confidence
in 1999 and 2000 resulted in GDP growth of 4.4% in 2000. Energy rationing
caused by water shortages in 2000 and 2001 and the political and economic
crisis in Argentina, which accelerated during the second half of 2001, had an
adverse effect on market confidence and consumer spending. These factors
together with the global economic slowdown and the events of September 11, 2001
in the United States, contributed to the reduction in economic growth in Brazil
to 1.4% in 2001.

      At the end of 2002, Brazil elected a new president from the Workers
Party, Luiz Inacio Lula da Silva. In the period leading up to, and
subsequent to, his election, there was substantial uncertainty relating to the
policies that the new government would pursue, including the potential
implementation of the macro-economic policies that differed significantly from
those of the prior administration. This uncertainty resulted in a loss of
confidence in the Brazilian capital markets, including the steady devaluation
of the real against the U.S. dollar in that period. In 2002 GDP grew by 1.5%,
according to IBGE.

      Although the new government has not departed in any material way from
previous policies, the current high levels of inflation and interest rates
continue to impact consumer spending.






------------------------
1 PepsiCo has not yet released market information for the 2002 claendar year.
We have therefore based our market analysis on 2001 information for soft drinks.


                                      25


<PAGE>


THE BRAZILIAN BEER MARKET

      FOURTH LARGEST MARKET IN THE WORLD


      Brazil is the largest beer market in Latin America. The following table
shows the ranking of beer consumption per country in selected markets in 2002:

<TABLE>
<CAPTION>
<S>                                   <C>
COUNTRY                                2002 ANNUAL CONSUMPTION
-------                                -----------------------
                                       (millions of hectoliters)
China..................................242
United States..........................237
Germany................................98
Brazil.................................85
Japan..................................70
Mexico.................................52
Venezuela..............................20
Colombia...............................13
Argentina..............................11
</TABLE>
-------------------
Source:  Euromonitor International, Inc. "World Market for Beer Report, 2002"

      LOW PER CAPITA BEER CONSUMPTION.

      Beer is the second most popular drink category in Brazil after soft
drinks. However, per capita beer consumption in Brazil is relatively low
compared to many other large markets, mainly due to the unequal regional income
distribution the Brazilian population. Per capita consumption of beer has been
relatively stable since 1995 despite declines in real wages and attempts to
access the lower income segments of the population. Per capita consumption of
beer in Brazil was approximately 49 liters per annum in 2002, and ranks 29th
according to Euromonitor. The following table sets forth the world ranking in
terms of per capita beer consumption rate in selected countries in 2002:

<TABLE>
<CAPTION>
<S>                                   <C>
COUNTRY                                2002 ANNUAL CONSUMPTION
-------                                -----------------------
Germany................................119
United States..........................85
Venezuela..............................79
Mexico.................................51
Brazil.................................49
Russia.................................48
Argentina..............................30
</TABLE>
--------------------
Source:  Euromonitor International, Inc. "World Market for Beer Report, 2002"

      CHANNELS

      Brazilian beverages sales are distributed through several points of
sales, demonstrated by the fact that AmBev serves approximately one million
points of sale. On-premise sales (particularly through bars and restaurants)
dominate the market and have the highest margins. Off-premise sales, mainly
through supermarkets, are highly price-sensitive, with cans as the predominant
packaging through this channel. Channel mix has been stable in the last few
years, with supermarkets representing approximately 31% of the market in 2002,
according to Nielsen.


                                      26


<PAGE>


      PREVALENCE OF RETURNABLE PACKAGING.

      The main packaging in bars and restaurants are 600 ml returnable bottles.
According to Nielsen, they represented approximately 70% of beer sales in 2002,
with the remaining 30% being sales of one-way packagings, including non-
returnable bottles and cans, sold mainly in supermarkets. As on-premise beer
sales are typically delivered in returnable bottles, the capital expenditures
and the commitments necessary to develop an efficient bottling operation remain
a significant barrier to entry in the Brazilian beverage industry.

      PRICING.

      Wholesale and retail prices of beer have not been regulated in Brazil
since July 1990, when formal governmental price controls were lifted. Beer
sales volume is heavily influenced by pricing. Key factors used in determining
retail price for beer include brand preference, national and/or local price
promotions offered by manufacturers, whether consumption takes place on or
off-premise, the category of product, whether the packaging is returnable or
non-returnable, the desired profit margins and the geographical location of the
retailer.

      The following table shows our estimate of the breakdown of the average
retail price of beer paid by Brazilian consumers for our products in 2002:

<TABLE>
<CAPTION>
<S>                                                                      <C>
Manufacturers.......................................................     31%
Distributors........................................................     10%
Retailers...........................................................     32%
Taxes...............................................................     27%
                                                                        -----
Total...............................................................    100%
</TABLE>
-------------------
Source:  Company Information

      SEASONALITY.

      Sales of beer in Brazil and AmBev's other principal markets are seasonal,
with stronger sales in the early summer. This is demonstrated by the following
table, which sets forth our sales by quarter in Brazil for the years indicated:

<TABLE>
<CAPTION>
<S>                                     <C>    <C>    <C>     <C>
                                          YEAR ENDED DECEMBER 31,
                                          -----------------------
                                        2002   2001   2000(1) 1999(2)
                                        ----   ----   ------  -------
                                         (millions of hectoliters)

First quarter.......................... 13.3    15.2    14.3    10.0
Second quarter......................... 12.9    13.1    13.0     8.7
Third quarter.......................... 13.6    13.3    13.7     9.4
Fourth quarter......................... 18.2    17.4    18.2    12.4
                                       ------  ------  ------  ------
Total.................................. 58.0    59.0    59.2    40.6
                                       ------  ------  ------  ------
                                       ------  ------  ------  ------
</TABLE>
--------------
Source: Company figures.

Amounts may not add due to rounding.

(1) Includes Antarctica sales and excludes sales of Bavaria.

(2) Sales of Brahma only.

      Our fiscal and accounting year-end falls in the middle of the Brazilian
and South American summer. As a result of increased consumer demand at this
time, our working capital is seasonally inflated.


                                      27


<PAGE>


Certain key global competitors with operations predominantly within the
Northern hemisphere, who also have December year-ends, typically experience
below annual average consumption patterns at that time. Their working capital
trends will therefore be affected inversely.

      TAXATION

      Brazilian beverage producers operate in a relatively unfavorable tax
environment, which results in higher beverage prices to consumers. In 2002, the
average excise and value-added taxes (IPI and ICMS) applicable to sales of beer
paid by beer producers, distributors and retailers in Brazil would
hypothetically equal 77% of AmBev's net sales.

      Brazilian taxes on beer products include:

      o   IPI - a federally imposed excise tax on industrialized products,
          which is a fixed amount based on units sold, varies depending on the
          size and packaging of the product, and is levied based on the FOB
          sales price of the product.

      o   ICMS - a state value-added tax. In the beverage industry, the
          producer has the obligation of collecting the distributor's and the
          retailer's tax debt portion. The ICMS is package-specific (in most
          states-21 out of 27), varies depending on size and packaging, and is
          levied based on a tax rate applied to the consumer price (each state
          has a different tax rate).

      o   COFINS-a federally imposed 3.0% tax on revenues; and

      o   PIS - a federally imposed 1.65% tax on revenues, calculated as the
          balance between 1.65% of gross revenues less 1.65% of the sum of
          purchases of raw material, packaging and equipment. This was enacted
          in law in December 2002 through Law No. 10,637/2002. It is collected
          through a system similar to VAT, whereby the tax is deductible and
          chargeable through the supply chain.

            To partially mitigate these high tax rates, many states in Brazil
      offer attractive sales tax deferral programs to attract investments to
      their regions. See "Operating and Financial Review and Prospects - Sales
      tax deferrals and other tax credits" and "Key Information - Risk Factors
      - The pending tax reform in Brazil may increase our tax burden".

THE BRAZILIAN SOFT DRINK MARKET

      THIRD LARGEST MARKET IN THE WORLD.

      Brazil's soft drink market is currently the second largest in Latin
America and the third largest in the world in terms of sales volume, with
approximately 117 million hectoliters sold in 2001, according to PepsiCo. The
following table shows estimated soft drink consumption in selected countries in
2001:

<TABLE>
<CAPTION>
COUNTRY                     ANNUAL CONSUMPTION          ANNUAL CONSUMPTION
-------                     ------------------          ------------------
<S>              <C>       <C>                          <C>
                          (millions of hectoliters)   (millions of 8 oz. cases)
United States.............497                                8,755
Mexico....................138                                2,423
Brazil....................117                                2,062
Germany...................71                                 1,248
China.....................68                                 1,202
Great Britain.............56                                  993
</TABLE>


                                      28


<PAGE>


--------------
Source:  PepsiCo

      SOFT DRINK CONSUMPTION.

      Brazilian soft drink consumption grew considerably in the 1990s but has
remained relatively stable in the most recent years, according to Nielsen. For
the same demographic reasons as for beer consumption, per capita consumption of
soft drinks remains low at 66.5 liters in 2001, according to PepsiCo. The
following table, which shows per capita consumption in selected countries in
2001, demonstrates that Brazil's per capita consumption remains relatively low:

<TABLE>
<CAPTION>
<S>                             <C>                      <C>
                                                             2001 LITERS PER
COUNTRY                                                        PERSON / YEAR
-------                                                      ---------------

United States...........................................          175.6
Mexico..................................................          133.1
Great Britain...........................................           93.7
Germany.................................................           84.6
Brazil..................................................           66.5
China...................................................            5.3
</TABLE>
--------------
Source:  PepsiCo

      FLAVORS.

      The Brazilian soft drinks market is primarily composed of Colas and
flavored soft drinks. The principal competitor of the Colas is Guarana, a
Brazilian soft drink based on a tropical berry-like fruit that grows in the
Amazon rainforest. The flavors segment has grown significantly in market share
in recent years, mainly due to low price manufacturers, called B-Brands. Since
1999, the market has successfully developed strategies to halt the growth of B-
Brands, including pricing policies and advertising. New flavors such as apple,
citrus and strawberry have also been introduced in the previous years by low
price manufacturers. In 2002, The Coca-Cola Company launched a flavored line
extension using the Fanta brand.

      The following table sets forth the percentage of total carbonated soft
drink sales volume by flavor in Brazil during the periods indicated:

<TABLE>
<CAPTION>
<S>                                    <C>      <C>      <C>     <C>
                                         YEAR ENDED DECEMBER 31,
                                      ----------------------------------
FLAVOR                                 2002     2001     2000     1999
--------------------------            ------  -------   ------  --------
                                                     (%)
Guarana........................        27.7     28.3     28.1     29.2
Cola...........................        44.3     43.9     42.9     42.3
Others.........................        28.0     27.8     29.0     28.5
</TABLE>
Source: Nielsen

      PACKAGING.

      Non-returnable packaging, such as cans and plastic bottles (Pet), are the
principal containers in the Brazilian soft drinks market, representing 88.9% of
the packaging used for soft drinks in 2002. The introduction of plastic
bottles, specifically the 2-liter PET, has been the principal innovating factor
in the sector in the last 10 years, leading to a change in the category dynamic
by dropping price per liter and facilitating the entry and development of new
regional low-price competitors, which together represented approximately one
third of the total market in 2002. While the introduction of non-returnable
packaging


                                      29


<PAGE>


required relatively low investments for the development of an efficient
bottling operation and distribution network, resulting in consumption
increase, it is also a less profitable type of packaging, resulting in lower
industry margins.

      CHANNELS.

      Due to the price-sensitivity of the market in soft drinks, and the
migration in the packaging toward low cost non-returnable plastic bottles, the
channels through which soft drinks are sold in Brazil have also changed
migrating toward off-premise. According to Nielsen, in 2002 approximately 23.9%
of Brazilian soft drink sales were made on-premise (bars and restaurants), with
the remaining 76.1% being off-premise, predominantly in supermarkets.

      PRICING.

      There are no government-imposed price controls on the wholesale or retail
prices of soft drinks since 1990. AmBev's pricing strategy has been and will
continue to be to narrow the price gap between our brands and the market leader
brands, through initiatives to improve our revenue management.

      The following table shows our estimate of the breakdown of the average
retail price of soft drinks paid by Brazilian consumers for our products in
2002:

<TABLE>
<CAPTION>
<S>                                                          <C>
Manufacturers...............................................       32%
Distributors................................................       10%
Retailers...................................................       37%
Taxes.......................................................       21%
                                                                 ------
Total.......................................................      100%
</TABLE>
-------------
Source:  Company estimates

      SEASONALITY.

      As with beer, soft drink sales in Brazil and in AmBev's other principal
markets are seasonal, although seasonal variations in soft drink sales tend not
to be as strong as seasonal variations in beer sales. The following tables set
forth AmBev's quarterly sales for the years indicated in millions of
hectoliters in Brazil:

<TABLE>
<CAPTION>
<S>                                     <C>        <C>     <C>         <C>
                                           YEAR ENDED DECEMBER 31,
                                        -----------------------------
                                        2002     2001     2000(1)     1999(2)
                                       ------   ------   ---------   ---------
                                              (Millions of hectoliters)
First quarter..........................  4.4      4.7       4.1         2.5
Second quarter.........................  4.1      4.0       3.7         1.8
Third quarter..........................  4.0      4.4       3.9         1.8
Fourth quarter.........................  5.7      5.4       5.3         2.4
                                        ------   -----     -----       ------
Total.................................. 18.2     18.5      17.1         8.5
                                        ------   -----     -----       ------
                                        ------   -----     -----       ------
</TABLE>
----------------
Source: Company Figures

(1)Includes Brahma and Antarctica sales.
(2)Sales of Brahma only.


We focus on our core soft drink brands, Guarana Antarctica and Pepsi. In
2002 we expanded the Pepsi brand portfolio to include Pepsi Twist (a cola soft
drink with natural lemon juice), which has been  well


                                      30


<PAGE>


received by consumers. The following table illustrates the market shares of
our leading soft drink brands (regular and diet) during the periods indicated:

<TABLE>
<CAPTION>
<S>                                     <C>     <C>     <C>
                                       YEAR ENDED DECEMBER 31,
                                        2002     2001       2000
                                         (% of market share)

Guarana Antarctica..................    7.9      8.0       7.9
Sukita.................................  1.0      1.5       1.5
Pepsi-cola.............................  3.9      4.3       4.3
Pepsi Twist............................  1.2      0.0       0.0
Others.................................  2.0      3.1       3.4
Total                                   16.0     16.9      17.1
--------------
Source: Nielsen
</TABLE>

      Our Antarctica portfolio includes Guarana Antarctica (regular and diet
version), Soda Limonada Antarctica (regular and diet version) and Tonica
Antarctica (regular and diet version). Our Pepsi portfolio includes Pepsi Cola,
Pepsi Light, Pepsi Twist, Pepsi Twist Light, Teem and Seven Up. Our Brahma
portfolio includes Sukita, Sukita Light, Guarana Brahma (regular and diet
version), Limao Brahma and Tonica Brahma.

      TAXATION.

      As is the case with beer sales, sales of soft drinks in Brazil are
subject to a high level of taxation, which results in substantially higher
prices to consumers. See "- The Brazilian Beer Market-Taxation". The overall
level of taxation in soft drinks is similar to beer, however, the IPI rate on
soft drinks that contain natural fruit juice or vegetable extract is reduced by
50%. In 2002, the average excise and value-added taxes (IPI and ICMS)
applicable to sales of soft drinks paid by producers, distributors and
retailers in Brazil would hypothetically equal approximately 55% of AmBev's net
sales.

THE BRAZILIAN NON-ALCOHOLIC AND NON-CARBONATED (NANC) MARKET

      NANC CONSUMPTION.

      The Brazilian NANC market consists primarily of powdered juice, bottled
water, concentrated juice, ready-to-drink (RTD) juice, ready-to-drink tea,
isotonic sport drinks, energy drinks and coconut water, both natural and
industrialized. The Brazilian NANC market has grown at an annual compounded
rate of 9% per year from 1999 to 2002, according to Nielsen, but it still
represents less than half of the Brazilian soft drinks market. The following
table sets forth the estimated consumption, by category, in Brazil, during the
periods indicated:


<TABLE>
<CAPTION>
<S>                                        <C>       <C>         <C>           <C>
                                              YEARS ENDED DECEMBER 31,
                                        ---------------------------------------------
                                           2002       2001        2000        1999
                                        --------   --------     -------      --------
                                                   (Millions of hectoliters)

Water..............................       12.5      11.1          10.0        9.6
Ready-to-drink teas................        0.5      0.4           0.4         0.3
Isotonics..........................        0.3      0.3           0.3         0.4
Powdered juice.....................       21.5      18.8          17.0        16.5
Concentrated juice.................        6.2      5.8           5.7         5.5
Ready-to-drink juices..............        1.6      1.2           0.8         0.7
                                        --------   --------     -------      --------
Total..............................      42.6       37.6         34.2         33.0
                                        ========   ========     =======      ========
</TABLE>

----------
Source: Nielsen


                                      31


<PAGE>


      Our NANC segment includes sales of mineral water, isotonic sport drinks
and iced tea, which we sell and distribute through our beer distribution
networks.

      According to Nielsen, the Brazilian water market consumption totaled 12.5
million hectoliters in 2002. In May 2001, we acquired 100% of the capital stock
of Pilcomayo Participacoes S.A. (Pilcomayo), which controls 100% of
Fratelli Vita Bebidas Ltda. (Fratelli Vita). The latter produces and markets
the Fratelli Vita brand of mineral water.

      The isotonic beverage market is relatively new to Brazil, and the total
consumption in 2002 was approximately 0.3 million hectoliters, according to
Nielsen. Fratelli Vita also produces the Marathon brand of isotonic sports
drinks, the second most popular brand in this market, with a 14.2% market share
by volume in 2002, according to Nielsen. In December 2001, we extended our
franchise agreement with Pepsi and incorporated the Gatorade brand into our
portfolio. This agreement, which expires in 2017, is an extension of AmBev's
current agreement with PepsiCo, signed in 1997, to produce and distribute Pepsi
products in Brazil. This partnership reinforces AmBev's strategic target to
grow its non-alcoholic beverages business. As of January 2002, we began
producing and distributing Gatorade to supermarkets. Gatorade is the leading
brand in this segment with an 80.5% market share. In November 2002, we
introduced a line extension - Gatorade Fierce - in three cities. Gatorade
Fierce is a strong colored isotonic drink, targeting the teenager market. For
information on the CADE investigation into our Gatorade agreement, see
"Consolidated Financial Statements and Other Financial Information-Legal
Proceedings-Joint Ventures and Alliances".

      The Brazilian iced tea consumption was approximately
0.5 million hectoliters in 2002, according to Nielsen. We participate in the
Brazilian iced tea market through a joint venture with Unilever Brasil Ltda.
(Unilever Brasil), under which we have the exclusive right to sell Lipton brand
iced tea in Brazil. This brand is the market leader in the iced tea segment,
with an estimated market share of 44.4% in 2002, according to Nielsen. Our
principal competitor in this market is Mate Leao, with a market share of
30.3% in 2002, according to Nielsen. In 2002, the Coca-Cola Company, through an
agreement with Nestle, introduced Nestea iced tea, which reached 8.1% market
share in 2002.

      SEASONALITY.

      As with beer and soft drink sales in Brazil, NANC sales are seasonal. The
patterns of seasonality for NANC are similar to those of beer. The following
table sets forth our quarterly sales volumes for the years indicated in Brazil
in thousands of hectoliters:

<TABLE>
<CAPTION>
<S>                                        <C>       <C>         <C>           <C>
                                              YEARS ENDED DECEMBER 31,
                                        ---------------------------------------------
                                           2002       2001        2000        1999
                                        --------   --------     -------      --------
                                                 (thousands of hectoliters)
First quarter..........                   433         225         140         152
Second quarter.........                   319         159         111         85
Third quarter..........                   277         187         114         111
Fourth quarter.........                   404         271         194         138
                                        --------   --------     -------      --------
Total..................                 1,434         842         560         484
                                        --------   --------     -------      --------
                                        --------   --------     -------      --------
</TABLE>
----------------
Source:  Company Figures


                                      32


<PAGE>


                            AMBEV BUSINESS OVERVIEW

HISTORY AND DEVELOPMENT OF THE COMPANY

      See "Background on the Company-History and Development of the Company".

OVERVIEW

      We are the largest brewer in Latin America in terms of volumes and the
fifth largest beer producer in the world, according to Euromonitor. We produce,
distribute and sell beer, soft drinks and other beverage products primarily in
Brazil, but also in Argentina, Venezuela, Uruguay and Paraguay. We are also one
of the largest Latin American soft drink producers and sole distributor of
Pepsi beverage products in Brazil. The balance of our business is comprised
primarily of sales of other beverage products, including water, isotonic sport
drinks, iced tea and other products. Our initial acquisition of a 40.475%
interest in Quinsa has expanded our interest in Argentina and other Latin
American markets, such as Bolivia and Chile. See "-Acquisition of Interest in
Quinsa". The initial acquisition was only completed on January 31, 2003 and did
not have an impact on our results for the year ended December 31, 2002.
Consequently, the analysis below does not include Quinsa.

      In 2002, our brands accounted for an average of 68.4% of the Brazilian
beer market, according to Nielsen. Our aggregate beer and soft drink production
capacity is 127.0 million hectoliters per year. In 2002, we utilized 69.3% of
our beer and 46.9% of our soft drink capacity in Brazil and recognized
consolidated net sales of R$ 7,325.3 million compared to R$ 6,525.6 million in
2001. Our total annual beer production capacity is 89.7 million hectoliters, of
which 84.4 million hectoliters is in Brazil, 2.5 million hectoliters is in
Argentina, 2.2 million hectoliters is in Venezuela, 0.3 million hectoliters is
in Uruguay and approximately 0.3 million hectoliters in Paraguay. For the year
ended December 31, 2002, net sales from our beer operations were
R$5,942.7 million, accounting for 81.1% of our consolidated net sales. The
following table sets forth the 2002 ranking based on volume market shares of
our leading brands:


<TABLE>
<CAPTION>
<S>                          <C>                                     <C>
                                                                  2002
-------------                                             ---------------------
BRAND                                                        BRAZILIAN RANKING
-------------                                             ---------------------

Skol Pilsen.........................................              1st
Brahma Chopp........................................              2nd
Antarctica Pilsen...................................              4th

____________________
Source:  Nielsen 2002
</TABLE>

      In December 2002, we had a 16.0% market share of the Brazilian soft drink
market, according to Nielsen. Our soft drink production capacity is 37.3
million hectoliters, which includes the production of proprietary and Pepsi
soft drinks. Our principal soft drink brands include our proprietary brands
Guarana Antarctica and Sukita, which together accounted for 52.5% of our
soft drink sales volume in 2002. In addition, through our strategic alliance
with PepsiCo, we are its sole bottler in Brazil and produce and distribute some
of Pepsi beverage products, which accounted for 34.7% of our soft drink sales
volumes in 2002. In total, we sold 18.2 million hectoliters of soft drink in
2002. For the year ended December 31, 2002, net sales from soft drink
operations were R$1,096.2 million, accounting for 15.0% of our consolidated net
sales.


                                      33


<PAGE>


      The remainder of our consolidated net sales is composed primarily of the
sale of by-products, but also includes sales of non-carbonated non-alcoholic
beverages, including isotonic sport drinks Gatorade and Marathon, Fratelli Vita
mineral water and Lipton Ice Tea.Other net sales as of December 31, 2002
totaled R$286.3 million, or 3.9% of our consolidated net sales, of which NANC
accounted for R$ 132.1 million, or 1.8%.

      We have an extensive distribution network for the sale and distribution
of our products, including currently a network of approximately 400 independent
third-party distributors. For the year ended December 31,  2002, third party
distributors accounted for 66.1% of our sales, while our direct distribution
system accounted for 33.9% of our sales volume for the same period.

OUR PRODUCTS AND BRANDS

      We produce beer, soft drinks and other beverage products, including
isotonic sport drinks, iced tea and water. For the year ended December 31,
2002, approximately 81.1% of our net sales consisted of domestic and
international beer sales and approximately 15.0% consisted of soft drink sales.
The following table sets forth our aggregate sales volumes of beer, soft drinks
and NANC during the periods indicated:

<TABLE>
<CAPTION>
<S>                       <C>     <C>     <C>
                                              YEAR ENDED DECEMBER 31,
                                       ------------------------------------
                                         2002         2001          2000
                                       --------    ---------      ---------
                                             (millions of hectoliters)
Beer (Brazil)............                58.0         59.0         59.3(2)
Beer (International).....                 3.9          3.3          2.9
Soft Drinks..............                18.2         18.4         17.2
NANC(1)..................                 1.4          0.8          0.6
</TABLE>
------------
Source: Company Information

(1) Component of the "Others" segment.
(2) Includes Antarctica sales and excludes sales of Bavaria.

      The following table sets forth, as a percentage of total sales, our
revenue breakdown for beer, soft drinks and NANC during the periods indicated:

<TABLE>
<CAPTION>
 <S>                                        <C>        <C>           <C>
                                              YEAR ENDED DECEMBER 31,
                                       ------------------------------------
                                         2002         2001          2000
                                       --------    ---------      ---------
                                                 (% of revenues)
Beer (Brazil)............                 75.7        73.9         77.0(1)
Beer (International).....                  5.4         6.4          4.6
Soft Drinks..............                 15.0        14.8         16.2
Other....................                  2.1         3.9          1.0
NANC.....................                  1.8         1.0          1.2
</TABLE>
-----------
Source: Company Information

(1) Includes Antarctica sales and excludes sales of Bavaria.


                                      34


<PAGE>


      BRAZILIAN BEER.

      Beer is our core business and the largest contributor to our net sales.
For the year ended December 31, 2002, Brazilian beer sales accounted for 75.7%
of our net sales, totaling R$5,546.4 million and with sales volumes of
58.0 million hectoliters.

      Core brands

      Our beer brands are divided into three main beer brand portfolios: Skol,
Brahma and Antarctica. Each of these portfolios offers a variety of beers,
including pilsner, lager, dark and non-alcoholic beers. Skol Pilsen, Brahma
Chopp and Antarctica Pilsen, which are all standard pilsen beers, are our core
products and the flagship products of their respective brand portfolios. Our
beer products are distributed through our Skol, Brahma and Antarctica
third-party distribution networks, as well as through our own direct
distribution network.

      Premium brands

      The remainder of our beer sales is attributable to premium brands, all of
which are also proprietary brands, with the exception of licensed brands Miller
and Carlsberg. Bohemia is the leading premium brand in Brazil growing from 0.6%
of volume market share in 2001, before its relaunch, to 2.1% in December 2002,
according to Nielsen. The development of this brand constitutes a significant
step to growing the super premium segment in Brazil, which represented 5% of
industry volumes and 7% of the share of value in Brazil, as of January 2003.

      In October 2002, we launched Skol Beats, another brand introduced to
develop the super-premium segment. This pilsen beer portfolio extension has a
higher alcohol content and is sweeter than mother-brand Skol Pilsen. The
initial launch was concentrated in Sao Paulo, Rio de Janeiro and Minas
Gerais and the roll-out for the whole country was performed in March 2003.

      The following table sets forth the market shares of our principal beer
brand portfolios by volume in Brazil:

<TABLE>
<CAPTION>
<S>                    <C>                      <C>         <C>
BRAND                                      YEAR ENDED DECEMBER 31,
------------                            -----------------------------
                                             2002           2001
                                          ---------      ----------
                                               (% market share)
Skol....................................     32.7           31.8
Brahma..................................     21.0           22.4
Antarctica..............................     13.4           14.4
</TABLE>
------------
Source:  Nielsen


      Our Skol portfolio includes Skol Pilsen, Skol Beats and Carlsberg, which
are pilsen beers, and Caracu, which is a dark beer.

      Our Brahma portfolio includes Brahma Chopp and Miller Genuine Draft,
which are pilsen beers and Malzbier, which is a dark beer, Brahma Extra, a
strong-flavored pilsen beer, and Chopp da Brahma, which is a draft beer.

      Our Antarctica portfolio includes Antarctica Pilsen, Bohemia, Antarctica
Pilsen Extra, Polar Export, Serramalte, Antarctica Original, Antarctica Pilsen
Extra Cristal and Antarctica Pilsener Chopp,


                                      35


<PAGE>


which are pilsen beers, Antarctica Malzbier and Antarctica Pilsener Chopp
Escuro, which are dark beers, Polar Export, which is a lager beer, and
Kronenbier, which is an alcohol-free beer.

      PACKAGING

      The majority of our beer is sold in 600 milliliter returnable glass
bottles. In order to maximize sales and per capita consumption of our products,
we analyze sales data on a regular basis in an effort to develop a mix of
product presentations that best satisfies our consumers. The following table
sets forth the historical presentations for our beer products by volume:

<TABLE>
<CAPTION>
<S>                           <C>               <C>        <C>        <C>
PRESENTATION                                    YEAR ENDED DECEMBER 31,
                                              ------------------------------
                                                  2002      2001     2000
                                              ----------  ------- ----------
                                                       (% volume)
Returnable glass bottles.......................   68%       67%       70%
Cans...........................................   26        27        25
Non-returnable glass bottles...................    3         3         4
Barrels (draft beer)...........................    2         2         2
Others.........................................    1         1         -
-------------
Source: Company Information
</TABLE>

      Beverage sales in non-returnable packages are less profitable. Cans are
particularly popular with supermarket vendors, primarily because of the need to
allocate additional space to store returnable bottles.

      INTERNATIONAL BEER

      TRADITIONAL MARKETS

      For the year ended December 31, 2002, international beer sales accounted
for 5.4% of our net sales, totaling R$ 396.3 million, and with sales volumes of
3.9 million hectoliters. Our market share in Argentina grew to 17.3% in
December 2002 from 16.6% in December 2001, despite an extremely unfavorable
macro-economic scenario. Our market share in Venezuela benefited from the
expansion of direct sales, which represent nearly 80% of the total sales
volume. The successful launch of Brahma Light in 2001 has also contributed to
increase our market share in Venezuela. AmBev's Uruguayan brands Nortena and
Patricia accounted for 46.6% of the Uruguayan market in December 2002, and
after a full year in Paraguay, our market share reached 22.1% in December 2002.

      Direct sales represented 55% of our total international sales in 2002.
This sale structure allows for consistent execution improvement at the point of
sale. Together with our sales execution, we increased the number of sub-zero
coolers placed at strategically located points of sale from 4,667 in 2001 to
8,161 in 2002.

      We have also focused on improving the efficiency of our facilities and
sales forces. During 2002, the Lujan brewery in Argentina was awarded the 2002
AmBev quality award, competing against all the international operations of
AmBev. In Brazil the Agudos plant earned this award. Furthermore, our direct
sales and distribution operations competed in the AmBev quality program for
Brazil with excellent results.

      In January 2003, our initial acquisition of an interest in Quinsa was
approved by CNDC. As a consequence, our operations in the Southern Cone
(Argentina, Uruguay and Paraguay) are in the process of being integrated with
those of Quinsa, so that we can benefit from synergies and best practices.


                                      36


<PAGE>


      NEW MARKETS

      We continued to expand our markets in Latin America through greenfield
entrance into Guatemala and Peru.

      In Guatemala, we formed a joint venture with CabCorp, the main Pepsi
bottler in Central America. CabCorp's efficient distribution and knowledge of
the market, coupled with our marketing skills and production and sales know-
how, could result in a low risk entry into the Central America market for us.
We will distribute in the markets of Guatemala, Honduras, El Salvador and
Nicaragua through this joint venture. We expect to have our operations running
during the second half of 2003.

      Our decision to pursue a greenfield project in Peru is based on the
potential of growth of that market, our expansion strategy in Latin America,
our developed know-how in the launch of greenfield projects, and the relatively
low entry cost. The investment in this project will involve certain production
assets that are currently available in Brazil. We expect to start to operate
during 2004.

      While our expansion strategy focus is expanding share and per capita
consumption in Brazil, opportunities for international expansion will always be
carefully considered.

      SOFT DRINKS.

      Sales of soft drinks represented approximately 15.0% of our net sales in
2002, totaling R$1,096.2 million and with sales volumes of 18.2 million
hectoliters. Soft drink exports represented less than 1% of our net sales in
each of the last three fiscal years.

      Our core soft drink portfolio includes the following brands: Guarana
Antarctica and Pepsi. Our soft drinks are sold and distributed through our beer
distribution network, which serves on-premise points of sale, as well as
supermarkets. Guarana Antarctica is also sold in major fast-food outlets
such as McDonald's.

      The following table sets forth the market shares of our leading soft
drink brand (regular and diet), which comprise our portfolio by volume in
Brazil during the periods indicated:

<TABLE>
<CAPTION>
<S>                                           <C>       <C>       <C>
PRESENTATION                                    YEAR ENDED DECEMBER 31,
                                              ------------------------------
                                                  2002      2001     2000
                                              ----------  ------- ----------
                                                     (% of market share)

Guarana Antarctica...................          7.9         8.0      7.9
Sukita.................................         1.0         1.5      1.5
Pepsi-cola.............................         3.9         4.3      4.3
Pepsi Twist............................         1.2         0.0      0.0
Others.................................         2.0         3.1      3.4
------------
Source: Nielsen
</TABLE>


      Our Antarctica portfolio includes Guarana Antarctica (regular and diet
version), Soda Limonada Antarctica (regular and diet version) and Tonica
Antarctica (regular and diet version). Our Pepsi portfolio includes Pepsi Cola,
Pepsi Light, Pepsi Twist, Pepsi Twist Light, Teem and Seven Up. Our Brahma
portfolio includes Sukita, Sukita Light, Guarana Brahma (regular and diet
version), Limao Brahma and Tonica Brahma.


                                      37


<PAGE>


      NANC (NON-ALCOHOLIC AND NON-CARBONATED BEVERAGES).

      The NANC segment includes sales of mineral water, isotonic sport drinks
and iced tea, which we sell and distribute through our beer distribution
networks. Sales of NANC products represented 1.8% of our net sales in 2002,
totaling R$132.1 million and with sales volumes of 1.4 million hectoliters.

      As of May 2001, we own 100% of the share capital of Pilcomayo
Participacoes S.A. , which controls 100% of Fratelli Vita Bebidas Ltda.
Fratelli Vita produces and markets the Fratelli Vita brand of mineral water and
the Marathon brand of isotonic sport drinks. According to Nielsen, the
Brazilian water market was 12.5 million hectoliters in 2002.

      The isotonic beverage market is relatively new to Brazil, and the total
market was approximately 0.3 million hectoliters in 2002, according to Nielsen.
Our proprietary brand Marathon is the second most popular brand in this market,
with a 14.2% market share by volume in 2002, according to Nielsen. In December
2001, we extended our franchise agreement with Pepsi and incorporated the
Gatorade brand into our portfolio. This agreement, which expires in 2017, is an
extension of AmBev's current agreement with PepsiCo, signed in 1997, to produce
and distribute Pepsi products in Brazil. This partnership reinforces AmBev's
strategic target to grow its non-alcoholic beverages business. As of January
2002, we began producing and distributing Gatorade, the leading brand in this
segment.

      The Brazilian iced tea market was approximately 0.5 million hectoliters
in 2002, according to Nielsen. We participate in the Brazilian iced tea market
through a joint venture with Unilever Brasil, under which we have the exclusive
right to sell the Lipton Ice Tea brand in Brazil. This brand is the market
leader in the iced tea segment, with an estimated market share of 44.4% in
2002, according to Nielsen. Our principal competitor in this market is Mate
Leao, with a market share of 30.3% in 2002, according to Nielsen.

      OTHER PRODUCTS AND MALT.

      Our sales of other products are composed mainly of sales of by-products
from beverage production and malt. Sales of other products amounted R$154.2
million in 2002.

DISTRIBUTION AND SALES

      DISTRIBUTION.

      We maintain an extensive third-party and direct distribution system,
which has enhanced the penetration of our brands throughout Brazil. Control of
a strong distribution network is a competitive advantage in the Brazilian
marketplace due to the large number of small points of sale as well as the
prevalence of returnable packaging, especially in beer, which must be
transported both to and from the points of sale. The Brazilian beer market is
characterized by a high proportion of on-premise consumption. According to
Nielsen, approximately 70% of the beer sold in 2002 was consumed on-premise in
bars, restaurants and small retail establishments, with the remaining 30% of
sales from supermarkets. Because on-premise beer sales are typically delivered
in returnable bottles, the capital expenditures and the commitments necessary
to develop an efficient bottling operation constitutes a significant barrier to
entry in the Brazilian beverage industry. However, as is the case in more
developed beverage markets, non-returnable packaging in the Brazilian market
has been growing over the past years and may continue to grow.

      We currently maintain three separate distribution networks composed of
exclusive third party distributors and direct distribution. Combined, these
distribution networks reach over one million individual points of sale in
Brazil. We are currently in the process of introducing multiple-brand


                                      38


<PAGE>


distribution (in which one distributor distributes two or more of our beer
portfolios. The consolidation of the three networks into a multi-brand system,
both in direct and third-party sales, is expected to result not only in cost
savings, but significantly improved distribution and execution at the point of
sale.

      We utilize the "pre-sell" system as our principal method of sales in
Brazil. Under the pre-sell system, a separate sales representative obtains
orders from customers prior to the time of delivery by trucks. The pre-sell
system enables us to utilize our trucks more efficiently, since our route
trucks can be loaded with precisely the amount needed to meet our customers'
orders, and it can also provide us with real-time information about the product
and presentation needs of our customers, as the majority of our sales staff
relays order information to our distribution centers using hand-held computers.
One of our major initiatives has been to continuously improve our distribution
network in order to increase the volume of sales and deliveries per
distributor, thus achieving economies of scale. In connection with our on-going
goal of increasing the efficiency of our distribution networks, we developed an
"Excellence Program" to evaluate, train and motivate our distributor partners.
The Excellence Program allows us to benchmark all third-party and direct
distribution operations and is a tool for standardizing the specific operating
procedures needed to run an efficient distribution operation and to maintain
brand integrity. This program was implemented in 1992 in the Brahma and Skol
distribution network and later in the Antarctica distribution network. As part
of our Excellence Program, we have significantly reduced the number of
distributors since 1994 and focused on increasing the volume and the quality of
service provided by these distributors. We also intend to expand our direct
distribution system in large urban areas, thereby incurring additional selling
expenses as a result of, among other things, expansion of our sales force and
increased transportation costs. However, we expect that this investment will be
more than off-set by additional revenues.

      Despite the growth of direct distribution, we believe that the continued
development of both our exclusive third-party and direct distribution networks
are fundamental to our success. We will continue to invest in both the third-
party and direct systems, including the exchange of best practices, to improve
overall point-of-sale execution.

      Third-Party Distribution Network.

      Our third-party distribution network, currently the primary means of
distribution for our products in Brazil, distributed approximately 66.1% of our
volume for the year ended December 31, 2002. We have exclusive agreements with
nearly 400 independent distributors who collectively cover all 26 states in
Brazil and the Federal District. As we seek to improve efficiencies in our
distribution network, including economies of scale, we will seek to continue to
consolidate our three distribution networks.

      Our distribution agreements require the distributor to carry exclusively
our Brahma, Skol and/or Antarctica beer portfolios, as well as our soft drink
core portfolio, and grant the distributor exclusive rights to sell such
products within a defined territory. Generally, these agreements have an
initial term of between one and five years and are renewable for an additional
term after which the contract will be undetermined. In addition, pursuant to
our agreement with CADE, we are required to share our distribution network with
Dado Bier brand.

      The optimal number of distributors within an area is determined by
considering, among other things, market needs, number of points of sale, and
geographic features. Our sales volume is not concentrated in any one
distributor within any particular region.

      Our third-party distributors pay for our products either in cash at time
of delivery or through a credit arrangement. Credit terms are typically based
on the distance between the distributor and the plant, with one extra credit
day for each 600 kilometers between the plant and the geographical region
covered by the distributor. Our current average credit term with our
distributors is approximately two days. We


                                      39


<PAGE>


have an administrative team dedicated to providing support to our third-party
distributors and improving the efficiency and reducing their costs. Under our
Excellence Program we continually seek to optimize practices for cost
reduction, sales effectiveness and customer service. We have also developed
several other innovative programs aimed at improving our distribution network,
such as educational programs at our in-house training academy for our in-house
and third-party distribution personnel, and weekly sales force training
through video satellite feeds containing market updates and information on our
current strategic initiatives.

         Direct Distribution System.

      In addition to our third-party distribution networks, we operate a direct
distribution system which distributes our products directly to points of sale,
including for both on-premise and off-premise consumption. Our direct
distribution system includes 35 direct distribution centers that together
delivered approximately 33.9% of our beverage products by volume for the year
ended December 31, 2002. We intend to continue expanding the number of brands
handled by our direct distribution system in larger urban areas and expect
direct sales to account for up to 50% of our sales by volume in the next years.

      SALES.

         Points of Sale.

      We restructured our Brazilian sales operations, and as of April 1, 2003,
our operations in Brazil are divided into nine geographic regions. Until April
1, 2003 we had five regions. We expect this change to further improve execution
as we intend to become closer to the market. During 2002, our products were
sold in approximately one million points of sale throughout Brazil. We sell our
beverage products throughout Brazil to:

         o    retail establishments such as restaurants, bars and small- and
              medium-sized retail outlets, primarily for on-premise
              consumption;

         o    small formats for both on and off premise consumption; and

         o    supermarket chains for off-premise consumption.

         Terms of Sale.

      In direct distribution, the terms and other credit conditions are defined
for each point of sale based on a credit score model, with average terms of
approximately five days. Some specific clients, such as major supermarkets and
clients with national presence, enjoy longer credit terms (average of 20 days).

         Sales Force.

      We maintain a separate sales force for each of our three beer brand
portfolios, whose responsibilities are divided by geographic region. These
sales forces monitor the performance of our products in several different ways,
including evaluation of sales by brand, presentation (packaging) and
distribution channel. When a given territory is serviced by an exclusive,
third-party distributor, the salesperson is an employee of the distributor. If
the area is serviced by our direct distribution, the salesperson is our
employee. Sales personnel are offered various incentive packages designed to
maximize margins and revenue at given price levels and to prevent cannibalizing
sales from our other brands.


                                      40


<PAGE>


         Pricing.

      Since the Brazilian government deregulated beer prices in 1990, our
pricing has generally been based upon a suggested retail price issued
periodically by our headquarters. The final selling price in each of our nine
market regions is based on the suggested price, and takes into account local
taxes and competitive pressures. See "-Brazilian Beverage Industry Overview-The
Brazilian Beer Market-Pricing". Actual prices are reported daily through our
information network, so that the corporate staff is able to monitor discount
levels and detect market trends. When determining the suggested price, we
consider many factors, each of which varies in importance from time to time.
These factors include general economic conditions, regional taxes, the success
and profitability of our various product presentations, the prices of its
competitors, the effects of inflation and the level of its costs. We work
continuously with the owners of our points of sale to achieve competitive
consumer prices. Most of our sales force work with handheld computers, equipped
with a sales algorithm, which enables them to set optimal retail prices. There
is currently no regulation of wholesale or retail beer or soft drink prices in
Brazil.

      Sales of our products are not dependent upon any single customer. Our
largest customer accounted for less than 3% of our total net sales in 2002.


      Advertising and Promotional Activity.

      We advertise and promote our products through television and other media
advertising campaigns, including billboards, and through the sponsorship of
recreational events. In addition, we engage in various point of sale
promotions, such as end-aisle displays and special contests, aimed at enhancing
consumer preference for our brands. In certain competitively key outlets, we
provide our point-of-sale establishments with branded furniture featuring our
products' logos and distinctive color schemes, and, where competitively
appropriate, promotional banners and posters advertising the pricing of our
products at that establishment. These programs allow us to gain visual
dominance of particular points of sale, strengthening our brand and encouraging
customers to purchase our products.

      On May 24, 2001, we signed an agreement with the Brazilian Soccer
Federation, or CBF, for sponsorship of the Brazilian national soccer team. The
Guarana Antarctica brand logo is displayed on the Brazilian national soccer
team training shirt. According to the sponsorship agreement, we may also run
other promotions, use illustrated cans, distribute points of sale merchandising
materials and implement advertising campaigns, which may be extended to our
entire beverage portfolio. We have chosen Guarana Antarctica as the soft
drink brand to initiate our sponsorship campaign. We will pay the CBF a minimum
of U.S.$10 million annually for 18 years. The amount payable by us may increase
by up to double the minimum amount based on bonus format on the performance of
our proprietary soft drink market share.

      A key marketing initiative has been the introduction into the Brazilian
market of our custom-made beer coolers for use in points of sale focusing on
on-premise consumption, especially designed and built to chill beer at the
optimal temperature for consumption in Brazil. Before these coolers were
introduced to the points of sale, most beer in Brazil was presented to
consumers in refrigerators designed to chill soft drinks. Our special coolers,
decorated to maximize the visual impact of our Brahma, Skol, Antarctica and
Bohemia brands, chill our beer products to sub-zero (centigrade) temperatures,
which market research has shown to be consumers preferred temperature, and have
shown a positive impact on sales volumes at their locations. In 2002, we had
already 118,000 coolers installed in key strategic locations throughout the
country. We plan to significantly increase our number of installed sub-zero
coolers.

      We regularly conduct market surveys to monitor the image of our products
and the effectiveness of our marketing activities. Within the last few years we
initiated several marketing plans, which were


                                      41


<PAGE>


designed to assist in making commercial strategy decisions for each
environment in which we compete. We also use a telephone service, the
"Consumer Service Center," which enables us to listen to consumers' comments
about our products and which receives approximately 20,000 calls per month
from consumers. Communication with consumers is a major priority for us and
has been improved by the creation of websites for each of our principal
beverage brands.

      Packaging.

      The substantial majority of our beer sales are made in 600 milliliter
returnable glass bottles. In order to maximize sales and per capita consumption
of our products, we examine sales data on a regular basis in an effort to
develop a mix of product presentations to best satisfy our customers. The
following table sets forth the historical presentations for our beer products
(by volume):

<TABLE>
<CAPTION>
<S>                             <C>                 <C>    <C>     <C>
PRESENTATION                                      YEAR ENDED DECEMBER 31
---------------                                ------------------------------
                                                   2002     2001(1)     2000(1)
                                               ---------  ----------  ---------
                                                          (% of volume)
Returnable glass bottles.......................     68%       67%        70%
Cans...........................................     26        27         25
Non-returnable glass bottles...................      3         3          4
Barrels (draft beer) and others................      3         2          2

-----------
Source: Company Information
   (1)Reflects combined Brahma and Antarctica data.
</TABLE>

      Packaging in the Brazilian beer market has been characterized by the
predominance of returnable glass bottles. However, the cans segment grew after
1994 due to favorable foreign exchange rates, which made it cheaper to import
aluminum used for can production, as well as the decision by some supermarkets
to discontinue the sale of beer in returnable bottles. Aluminum can prices
increased in local currency as a result of the devaluations of the real in 1999
and 2002. Beverage sales in cans are generally less profitable for us because
of the lower margins attributable to non-returnable packages. Cans are
particularly popular with supermarket vendors, primarily because they prefer
not to allocate the additional space necessary to store returnable bottles.

      The soft drink industry in Brazil moved rapidly to one-way plastic
bottles and cans as opposed to returnable glass bottles during the early
1990's. The following table sets forth the packaging presentation of our soft
drink products (by volume):

<TABLE>
<CAPTION>
<S>                             <C>                 <C>    <C>     <C>
PRESENTATION                                      YEAR ENDED DECEMBER 31
---------------                                ------------------------------
                                                   2002     2001(1)     2000(1)
                                               ---------  ----------  ---------
                                                          (% of volume)
One-Way plastic bottles.....................       66%        65%        63%
Cans........................................        25        24         23
Returnable glass bottles....................         7         9         13
Post Mix....................................         2         2          1

-------------
Source: Company Information
 (1)Reflects combined Brahma and Antarctica data.
</TABLE>


                                      42


<PAGE>


      EXPORT SALES.

      Total exports of beer represented less than 1% of our total net sales in
2002. Total exports of soft drinks represented less than 1% of our net sales in
2002. For more information regarding our beer and soft drink exports see "-Our
Products and Brands". We may explore opportunities to expand export sales of
our beer and soft drink products mainly to other Latin American countries.

COMPETITION - BEER.

      Beer manufacturers compete for market share through brand preference,
distribution, product availability, pricing, product packaging, consumer
promotions and service provided to retail outlets, including merchandising
equipment, maintenance of bottle inventories and frequency of visits.

      Until July 1999, when Brahma and Antarctica came under our common
control, the Brazilian beer market had three major producers: Brahma, which was
the market leader through its Brahma and Skol brands, followed by Antarctica,
owner of the Antarctica Pilsen and Bavaria Pilsen brands (the latter of which
we have since sold to Molson Inc. pursuant to our performance agreement with
CADE), and Cervejarias Kaiser Brasil Ltda. (Kaiser), owner of the Kaiser Pilsen
brand (which was sold to Molson in March 2002). In December 2002, AmBev, Kaiser
(now owned by Molson) and Molson accounted for approximately 82.4% of beer
sales volumes in Brazil, according to Nielsen. We are the leading producer in
the Brazilian beer market, followed by Molson and Schincariol.The beer business
in Brazil is characterized by strong competition among these major producers,
with each engaging in intensive advertising and promotional campaigns, the
introduction of new brands and the development of more convenient forms of
packaging.

      Molson entered the Brazilian beer market in 2000 with the purchase of the
Bavaria brand and related assets from us. See "Background on the
Company-Brazilian Antitrust Approval". The Combination and Brazilian Antitrust
Approval. The Bavaria brand held approximately 3.3% of the Brazilian beer
market by volume as of December 2002. Molson's purchase of Kaiser has made it
our largest competitor. Kaiser was a joint venture created in 1982 by Heineken
N.V., the Coca-Cola Company and 18 Brazilian Coca-Cola bottlers. Kaiser's
product portfolio includes Kaiser Pilsen, Kaiser Bock, Kaiser Gold, Summer
Draft and Heineken. Generally, Kaiser's prices are lower than ours in
comparable market segments. With the support of Heineken and Coca-Cola, Kaiser
has been, and we expect will remain, a significant competitor in our markets.

      Schincariol, which held approximately 9.6% of the Brazilian beer market
by volume as of December 2002, is a discount brand produced by Cervejaria
Schincariol S.A.. Schincariol's products are generally priced at a discount. In
2002, Schincariol launched two new brands, Primus and Glacial, which have small
market shares.

      The remaining 8.0% of the Brazilian beer market by volume for the year
ended December 31, 2002 was accounted for by small regional breweries. Sales of
imported beer are not significant in Brazil, due to the high costs of shipping
beer to Brazil and an import tariff of 21.5% of the import price, except for
products from Mercosur countries, which are duty-free. Nielsen estimates that
imports accounted for less than 1% of total beer consumption by volume in 2002.
Several super-premium or global beer brands are being produced in Brazil under
license, including our Miller and Carlsberg brands and Heineken beer (produced
by Molson).

      Our largest competitor in each of Argentina, Uruguay and Paraguay used to
be Quinsa, which, based on our estimates, held a majority of the beer market in
each of those countries in 2002. In May 2002, we announced our intention to
acquire a significant interest in Quinsa, which was successfully consummated on
January 31, 2003. See "-Acquisition of Interest in Quinsa". Our largest
competitor


                                      43


<PAGE>


in the Venezuelan market is Polar, which, based on our estimates, held a
substantial majority of the beer market in 2002.

      We distribute Miller under license in Brazil. The combination of South
African Breweries plc and Miller, announced in May 2002, may impact this
distribution agreement, although no discussions have taken place at this time.

      COMPETITION - SOFT DRINKS.

      As with beer, soft drink manufacturers compete for market share through
brand preference, distribution, product availability, pricing, product
packaging, consumer promotions, cooling equipment and service provided to
retail outlets, including merchandising equipment, maintenance of bottle
inventories and frequency of visits. In recent years, price discounting has
been frequently used as a means of increasing market share.

      As of December 2002, The Coca-Cola Company controlled approximately 49.8%
of the Brazilian soft drinks market. The Coca-Cola Company owns the Coca-Cola
brand, with 32.2% of the total market share, and the Sprite and Fanta brands,
which are also strong brands in the Brazilian flavors segment.

      Our main soft drink brands - Guarana Antarctica, Pepsi and Pepsi Twist
- had a combined market share of 13.0% in December 2002, according to Nielsen.
AmBev's other brands accounted for a 3.0% market share as of December 2002. The
remaining 34.2% of the soft drink volume comes from regional low-priced
companies focusing on low-income consumers. These B-brand players have grown
considerably and some have started to invest in advertising, regional TV
merchandising and promotional activities.

      The Brazilian soft drink market has historically been divided into three
pricing tiers, with Coca-Cola and Guarana Antarctica occupying the top
(highest-priced) tier due to significant brand preference. The second pricing
tier consists principally of our Pepsi, Sukita and Soda Limonada products and
Coca-Cola's Sprite and Fanta products. The remaining soft drink brands and
products, the B-brands, occupy the third tier.

      The following table sets forth average market prices for the leading 2-
liter PET packages:

<TABLE>
<CAPTION>
<S>                             <C>                        <C>
BRAND                                                    PRICE (R$/2 LITERS)
--------------                                         -----------------------

Coca-Cola...........................................           R$ 2.10
Pepsi Twist.........................................              2.00
Soda Limonada Antarctica............................              1.98
Guarana Antarctica..................................              1.88
Sukita..............................................              1.82
Fanta Laranja.......................................              1.80
Sprite..............................................              1.80
Pepsi...............................................              1.80
7 Up................................................              1.78

--------------
Source:  Nielsen as of December 2002.
</TABLE>


                                      44


<PAGE>


ACQUISITION OF INTEREST IN QUINSA

      In May 2002, we announced our agreements with Quinsa to integrate our
operations in Argentina, Paraguay and Uruguay, which were finalized on
January 31, 2003. Quinsa is the largest brewer in Argentina, Paraguay, Bolivia
and Uruguay and is present in Chile. It is also the main Pepsi bottler in
Argentina (including Gatorade and Tropicana) and Uruguay. It also has an
agreement with Nestle Perrier Vittel in Argentina for the production and
sale of the bottled water brands Eco de los Andes, Glaciar and Nestle Pureza
Vital.

      The combination of assets in Argentina, Paraguay and Uruguay will allow
for the optimization of the operational process, the strengthening of the
financial position of both companies, giving us the ability to compete more
efficiently with other international competitors that sell their products in
the region. We expect that the combination of Quinsa and our industrial assets
in Argentina, Paraguay and Uruguay will generate important synergies, including
significant savings in the purchase of raw materials and revenue management
initiatives.

      We contributed our beer producing assets in Argentina, Paraguay and
Uruguay (Linthal S.A., La Luisiana S.A., Special Purpose Vehicle Salus S.A.,
CCBA S.A. and CCBP S.A. and all direct or indirect subsidiaries of these
companies) to Quinsa in exchange for 26.4 million new Class B shares issued by
Quinsa. We also, simultaneously, purchased 230.9 million Class A shares from
Quinsa's controlling shareholder, BAC, for U.S.$346.4 million. As a result, at
January 31, 2003, we held 36.1% of voting rights in Quinsa. However, pursuant
to a shareholders agreement with BAC, we have the right, as long as our
participation in Quinsa does not fall below a certain threshold, to appoint 50%
of the directors to the Quinsa board of directors, with the remaining 50% being
appointed by BAC. Furthermore, pursuant to certain voting arrangements with
BAC, we have the right, with the same shareholder limitations, to cast the same
number of votes that BAC have at any Quinsa shareholders meeting, which
effectively gives us and BAC joint control of Quinsa. Also, BAC has granted
AmBev a call option to acquire the remaining 373.5 million Quinsa Class A
Shares held by BAC in exchange for newly issued shares of AmBev, which call
option may be exercised by AmBev beginning in April 2009 and in April of each
year thereafter, and AmBev has granted BAC a put option to sell to AmBev the
remaining 373.5 million Quinsa Class A shares held by BAC in exchange for newly
issued shares of AmBev, which put option may be exercised by BAC beginning in
April 2003 and in April of each year until 2009.

      In addition, on January 31, 2003, BAC and AmBev also acquired 6.1 million
and 8.0 million shares respectively of QIB, a subsidiary, from Heineken B.V.
(Heineken), which represents in the aggregate, a 15% interest in QIB and all of
the outstanding shares of QIB not owned by Quinsa. AmBev, BAC and Quinsa have
entered into a letter agreement dated as of January 13, 2003, with respect to
the shares of QIB. Pursuant to the letter agreement, AmBev and BAC have agreed
that they will not have the right to convert their QIB shares into Class B
common shares of Quinsa and that Quinsa will have the right to purchase the QIB
shares held by AmBev and BAC for cash at fair market value, if and when the
Quinsa board of directors decides to exercise such right.

      As a result of these transactions, at January 31, 2003 our initial
economic interest in Quinsa amounted to 40.475%.

      Furthermore, until AmBev has acquired an aggregate of 12.0 million Class
B Shares, in addition to the 26.4 million Class B shares it has acquired on
January 31, 2003, Quinsa will not issue, sell or exchange, or agree to issue,
sell or exchange, any Class B shares, unless Quinsa shall have first offered to
sell such Class B shares or rights relating thereto, to AmBev. As of June 16,
2003, AmBev had acquired an additional 1.1 million Class B shares of Quinsa in
the open market, resulting in an increase in its total economic interest in
Quinsa to 41.217%. AmBev may continue to seek to purchase in the open market
the remaining Class B shares as permitted pursuant to the agreement with
Quinsa.


                                      45


<PAGE>


      In order to benefit from certain corporate taxation incentives between
Argentina and Chile, we have structured the holding in Quinsa through two
Chilean registered companies, Lambic Chile S.A. and Hohneck Chile S.A. Please
refer to "Information on the Company-Organizational Structure".

      The acquisition of our interest in Quinsa was subject to the approval of
the Argentine antitrust authorities. On January 13, 2003, CNDC approved the
transaction through which AmBev and Quinsa were allowed to integrate their
operations in the Southern Cone, subject to certain conditions. The principal
conditions imposed by CNDC are:

         o    within 12 months of CNDC's approval, AmBev and Quinsa must
              dispose of the following assets:

            a) to an independent, financially sound, foreign brewer with no
            current production in Argentina i) the Bieckert and Palermo
            brands;

               ii) the license for production of the Heineken brand (should
               the transfer of this license prove to be impossible to
               complete, or should completion of this condition be considered
               very harmful for AmBev and Quinsa, the Imperial brand should be
               transferred instead);

               iii) the Norte brand, at the option of the Purchaser, provided
               that an agreement is reached on the price; and

               iv) the brewery located in Lujan, Buenos Aires, which currently
               produces Brahma brand;

            b) to a third party, not related to the purchaser of the assets
            above described and also not currently producing beer in
            Argentina, the malt production facility adjacent to the former
            Bieckert brewery located in Llavallol, Buenos Aires
            (alternatively, this third party could also run the facility for
            10 years)

         o    within 12 months of CNDC's approval, AmBev and Quinsa must
              submit documentation to the Argentinean regulators bearing
              evidence of their commitment to allow the purchaser of the
              disposed assets access, for a period of 7 years starting on the
              date of the transfer of such assets, to Quinsa's distribution
              network in Argentina, and to refrain from forcing or inducing
              their clients to purchase products other than beer; and

         o    AmBev and Quinsa must commit to produce Bieckert, Palermo and
              Heineken or Imperial, depending on which brand is transferred to
              the purchaser of such assets, if so required, for a period of
              two years starting on the date the assets are transferred.

      The results and financial position of Quinsa were consolidated
proportionately in our Brazilian GAAP financial statements for the first
quarter of 2003 filed with the CVM on May 9, 2003. For further information on
the impact of this on our business, please see "Operating and Financial Review
and Prospects-Future Impact of Quinsa".

      Operations of Quinsa

      Quinsa is a Luxembourg-based holding company which controls 85% of QIB.
The remaining 15% share had been owned by Heineken International Beheer B. V.
("Heineken") until it sold its participation in QIB in January 2003. Their
former stake is now held by BAC and by AmBev. BAC and AmBev hold 6.4% and 8.6%
of QIB's shares, respectively.


                                      46


<PAGE>


      Quinsa, through QIB, controls beverage and malting businesses in five
Latin American countries. Its beer brands are strong market leaders in
Argentina, Bolivia, Paraguay and Uruguay and have a presence in Chile. Further,
pursuant to Quinsa's strategic alliance with AmBev, it has entered into license
and distribution agreements to produce and sell in Argentina, Bolivia, Paraguay
and Uruguay the AmBev brands. Similarly, under the agreements AmBev may produce
and distribute Quinsa's brands in Brazil.

      For the year ended December 31, 2002, 73.1% of Quinsa's sales was
attributable to sales of beer. The beer business in each of Quinsa's countries
of operation was characterized by strong competition among the major brewers.
In recent years these major competitors had expanded into new markets, engaged
in intensive advertising and promotional campaigns and introduced new brands.
The consummation of Quinsa's transactions with AmBev in January 2003, however,
has changed the competitive environment in the southern cone markets somewhat,
since this alliance combines the two largest beer companies in Argentina,
Paraguay and Uruguay. Prior to the closing of this transaction, however, in
2002, Quinsa's breweries enjoyed leading market shares of 64.5% in Argentina,
76.1% in Paraguay, 51.9% in Uruguay and approximately 97.5% in Bolivia. In
Chile, Quinsa's market share was 10.8%, virtually unchanged from Quinsa's 10.7%
in 2001. Quinsa sells 33 different brands (e. g. Quilmes Cristal, Andes,
Pilsen, Pacena, Becker, etc. ) of beer in 11 different presentations through
all major channels of distribution throughout all of its markets.

      With 11.4 million hectoliters of beer sold in 2002, Quinsa' sales
accounted for an estimated 56.6% of all beer sold in the combined southern cone
markets. As of December 2002, Quinsa had a total brewing capacity of 19.6
million hectoliters.

      The Company also has bottling and franchise agreements with PepsiCo, and
thus accounts for 100% of PepsiCo beverage sales in Uruguay and more than 80%
of PepsiCo beverage sales in Argentina. Soft drink sales in Argentina reached
nearly 5.3 million hectoliters in 2002.

      We will be able to better access the effects of the acquisition of our
interest in Quinsa in the competitive environment in the Southern Cone markets
during 2003.

      JOINT VENTURES AND STRATEGIC ALLIANCES

      Souza Cruz

      On November 30, 2000, we announced the formation of a joint venture with
Souza Cruz S.A. (a subsidiary of British American Tobacco p.l.c.) to manage the
purchase of indirect materials that are non-strategic to the production
process, and of services through a "B2B - Business to Business" portal over the
Internet. The purpose of this initiative is to create benefits for the supply
chain, choosing the best practices, optimizing processes, rationalizing costs
and promoting the access of all and any suppliers to the purchasing companies,
obtaining better competitive conditions and guaranteeing the transparency of
the transactions.

      Dado Bier

      As part of our compliance with our performance agreement with CADE, we
entered into a four-year agreement in September 2001 with Dado Bier, to
distribute Dado Bier beer in Brazil. We selected Dado Bier after conducting a
public bidding process for the sharing of our distribution network in
accordance with performance agreement. Dado Bier will pay a commission for
using our distribution network.


                                      47


<PAGE>


      Pepsi

      In 1997, we acquired Pepsi-Cola Engarrafadora Ltda. and PCE Bebidas
Ltda., PepsiCo bottlers in southern and southeastern Brazil, and at the same
time acquired the exclusive rights to produce, sell and distribute Pepsi soft
drink products in northeastern Brazil. In 1999, we obtained the exclusive
rights to produce, sell and distribute Pepsi soft drink products throughout
Brazil. On October 9, 2000, following the combination, we entered into a new
franchise agreement with PepsiCo which terminated the Brahma franchise
agreement and granted us sole bottler and distributor rights for Pepsi soft
drink products in Brazil. In December 2001 we expanded our partnership with
PepsiCo to include the production, sale and distribution of Gatorade. CADE
issued a preliminary opinion in May, 2003 regarding the transaction. This
opinion states that at this time CADE does not consider the transaction to be
impeding fair market competition in the sector as Gatorade's market share has
been declining, while the market share of the natural isotonics has been
increasing. The Company has agreed to maintain employment levels with respect
to Gatorade production, maintain the current marketing policies for Gatorade
and Marathon, and to not have access to the Gatorade formula. See "Consolidated
Financial Statements and Other Financial Information-Legal Proceedings-Joint
Ventures and Alliances". Our PepsiCo franchise agreement expires in 2017, and,
thereafter, will be automatically renewed for additional ten-year terms absent
two years' prior notice by either party of its intent not to renew the contract
following the expiration of the initial or any subsequent term.

      In October 1999, we entered into a memorandum of understanding with
PepsiCo pursuant to which PepsiCo agreed to license or sell our leading soft
drink product, Guarana Antarctica, for bottling, sale and distribution by
PepsiCo outside of Brazil.

      Since April 2000, when CADE approved the controlling shareholders'
contribution, we have been working towards implementing the licensing or sale
of Guarana Antarctica with PepsiCo and negotiating the specific terms and
conditions of the licensing or sale of guarana concentrate or guarana
soft drinks. We have started to sell Guarana Antarctica in Portugal,
Puerto Rico and Spain through a franchising agreement with PepsiCo for the
production (using our concentrate) and distribution of Guarana
Antarctica. This venture represents less than 1% of our net sales. This
agreement has similar terms and conditions to those we have been using in
licensing agreements for Pepsi portfolio brands.

OTHER ACQUISITIONS AND DISPOSITIONS

      SALUS.

      On October 6, 2000, AmBev and Danone Group acquired 57.3% of the shares
of Salus, the second largest brewer in Uruguay and the local mineral water
market leader. This acquisition was structured through a joint venture, in
which Danone Group holds a 73.7% stake and AmBev holds the remaining 26.3%.
This acquisition involved two plants, one producing mineral water and another
producing beer. In 1999, Salus produced 190,000 hectoliters of beer and 850,000
hectoliters of mineral water. Salus produces the Patricia beer brand. As part
of the agreement with Quinsa, our 26.3% interest in the Salus joint venture was
transferred to Quinsa.

      CYMPAY.

      On February 14, 2001, AmBev exercised its option to acquire 95.48% of the
total capital of Cerveceria y Malteria Paysandu S/A (Cympay). The interest
was acquired from the German group Eufra Holding AG (Octker) for
R$89.0 million. The rationale for this acquisition was to increase AmBev's
international presence in beer as well as to secure additional malting
capacity. The Nortena and Prinz brands were acquired in the purchase of
Cympay.


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<PAGE>


      As part of the agreement with Quinsa, the brewing assets of Cympay were
contributed to La Luisiana, the shares of which were subsequently transferred
to Quinsa.

      PILCOMAYO.

      In May 2001, AmBev acquired, directly and indirectly (through Pati do
Alferes Participacoes S.A.), 50.0% of voting and capital stock of
Pilcomayo, increasing our interest in Pilcomayo to 100.0%, for R$30.5 million.

      PUBLIC OFFER FOR THE ACQUISITION OF SHARES OF ANTARCTICA POLAR.

      As of November 1, 2001, we had acquired outstanding minority interests in
Industria de Bebidas Antarctica Polar (Polar) amounting to R$98.4 million
through a series of share repurchases that began in April 2001. These share
repurchases increased our ownership in Polar to 98.1% of the voting capital
(97.4% of the total capital). On August 20, 2002, the remaining shares of Polar
which we did not already own were redeemed for R$6.8 million, resulting in
AmBev's owning 100% interest in Polar. On August 30, 2002 Polar was merged into
CBB.

      ACQUISITION OF INDuSTRIA DE BEBIDAS ANTARCTICA DO NORTE-NORDESTE
(IBANN).

      AmBev completed the merger of IBANN in November 2001. The amount paid to
the minority shareholders who exercised their appraisal rights was
R$242.2 million, equivalent to 27.9% of total capital. AmBev has now fully
merged IBANN into the holding company, and the assets and liabilities were
subsequently transferred to CBB.

      ACQUISITION OF SHARES OF CERVEJARIA ASTRA S.A.

      As of June 4, 2002, CBB, the wholly-owned subsidiary of AmBev, increased
its participation in the total capital of Cervejaria Astra S.A (Astra) from
73.13% to 93.61%, through the purchase of Aguia S.A.'s stake in Astra.
Throughout 2002, CBB purchased shares from minority shareholders and increased
its participation in the total capital of Astra to 96.7%. The 2002 stock
purchases involved a total consideration of R$128.5 million, including R$94.3
million of goodwill.

      CERVEJARIA INTERNACIONAL.

      On July 10, 2001, CCBP acquired the assets of Cerveceria Internacional
in Paraguay for R$29.2 million consisting of one beer plant with an annual
installed capacity of 300,000 hectoliters, representing 15.7% of Paraguay's
annual beer consumption of 1.9 million hectoliters. As part of AmBev's
acquisition of interest in Quinsa, our interest in CCBP was transferred to
Quinsa.

      AGUAS CLARAS.

      On September 30, 2001, CBB issued 26,958,767 preferred shares to the
shareholders of Cervejaria Aguas Claras S.A. (Aguas Claras), in exchange
for 40.9% of the preferred shares and 3.0% of the total shares held in the
latter. On that same date Aguas Claras was incorporated by CBB. The former
minority shareholder of Aguas Claras and current shareholder of CBB is a
federal government regional development financing agency, Fundo de
Investimentos do Nordeste-FINOR, which had extended lines of credit to Aguas
Claras related to its investments in the Northeast region of Brazil and
currently owns 0.44% of CBB's preferred shares.


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      MIRANDA CORREA.

      In July of 2002, we acquired shares of Miranda Correa, a beer company
in Amazonas, which assets were transferred in 2000 to Bavaria. We paid R$1.00
per share including goodwill of R$5.5 million.

      AMBEV*S ENTRANCE INTO GUATEMALA AND PERU.

      AmBev is currently building a brewery in Guatemala in partnership with
CabCorp, the main Pepsi bottler in Central America. The facilities' equipment
is being transferred from other facilities in Brazil due to the overcapacity
resulting from Brahma and Antarctica merger. Total expected investment should
amount to U.S.$50 million.

      On February 19, 2003, we announced our decision to enter into the
Peruvian beer market through the construction of a production facility and a
distribution network. The new plant will serve the local market and export to
certain neighboring countries, such as Ecuador. Our decision to pursue a
greenfield project in Peru is based on the potential growth of that market, our
expansion strategy to expand in Latin America, our developed know-how in the
launch of greenfield projects, and the relatively low entry cost.

      AmBev's investments in the Peruvian market are budgeted at U.S.$38.0
million over the next 12 months. This amount is comprised of CAPEX, working
capital and pre-operating expenses as well as operating expenses (including
launch expenses and marketing). AmBev expects to be fully operational in Peru
during 2004.

      OTHER RESTRUCTURING TRANSACTIONS.

      On December 30, 2002, AmBev, Souza Cruz, Coca-Cola, Sindicato Nacional
dos Distribuidores de Combustiveis (Sindicom), among others Brazilian non-
governmental entities, formed ETCO-Instituto Brasileiro de Etica
Concorrencial. The main purpose of this non-profit organization is to fight tax
evasion and illegal commerce. ETCO focuses on informing the public about unfair
market practices, supporting governmental and non-governmental entities and
proposing regulation regarding this subject.

      On June 11, 2001, CBB spun off its 99.9% interest in the voting and total
share capital of Eagle to AmBev against a R$1,530.8 million reduction in the
share capital of CBB without affecting the number of shares of CBB. The
spin-off sought to optimize income and other tax benefits within our corporate
restructuring program. AmBev continued to own 100% of the voting and total
share capital of CBB immediately after the spin-off.

      Prior to Brahma's merger into Antarctica, we restructured the assets and
liabilities of certain subsidiaries. The principal components of the
restructuring were the transfer of substantially all the assets and liabilities
of CRBS S.A., PepsiCo Engarrafadora Ltda. and Cervejarias Reunidas Skol to
Brahma as of October 31, 2000.

      On November 6, 2000, we entered into agreement providing for the sale of
Bavaria S.A. to Molson Inc. See "Background on the Company-Brazilian Antitrust
Approval". We entered into a six-year agreement with Molson to distribute
Bavaria. On April 30, 2002, Bavaria decided to early terminate the distribution
agreement signed at the time of the sale according to the CADE requirements
under the performance agreement to  enter into a distribution agreement with
the Coca-Cola Company.

      We have also made a number of other smaller acquisitions in recent years.


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<PAGE>


      OPERATIONS AT AMBEV

      As a result of an internal restructuring in 2002, the Manufacturing,
Logistics, Procurement, and Human Resources areas were grouped under a new
managerial structure named Operations. Although each of these areas maintains
its own executive officer and staff, there is a growing effort to better
integrate their activities and take advantage of their synergies. AmBev
believes this integration will not only facilitate the management of its
complex operations but also generate better results by sharing responsibilities
and more rapidly responding to market needs.

PRODUCTION AND AVAILABILITY OF RAW MATERIALS

      BEER AND SOFT DRINK PRODUCTION.

      Beer production involves several raw material and production stages. The
main ingredient in beer is malt, which is produced by germinating and roasting
barley in a process called "malting". Malt is mixed with water, hops and corn
grits or rice in the proportions necessary to obtain the desired taste. The
resulting mixture is called "wort". Wort is fermented with selected yeasts to
produce beer, which is then filtered and bottled. In addition to these natural
ingredients, delivery of the product to consumers requires packaging such as
bottles, aluminum or steel cans, labels and crown caps. The majority of the
beer brands share the same production process until the filtration stage,
relatively late in the brewing process, which increases efficiency and allows
for a better quality control.

      Soft drinks are produced by mixing water, flavored concentrate and sugar
or sweetener. Water is processed to eliminate mineral salts and filtered to
eliminate impurities. Purified water is combined with processed sugar or, in
the case of diet soft drinks, with artificial sweeteners, and concentrate.
Carbon dioxide gas is injected into the mixture to produce carbonation.
Immediately following carbonation, the mixture is bottled.

      For information on our production facilities, see "-Property, Plant and
Equipment".

      RAW MATERIALS.

      AmBev's Procurement department has a centralized structure divided in six
groups: Beer Raw Materials, Soft-drinks Raw Materials, Metals, Plastics, Paper
Labels and Glass Bottles, and Intermediate Raw Materials (recently created in
the beginning of 2003 to focus on the secondary raw materials).

      The managers of these groups heavily depend on strategic sourcing to
successfully negotiate their portfolios, and they also have developed extensive
knowledge regarding the commodities purchased by AmBev. Financial and supply
chain analysis, general industry knowledge, benchmarking studies and cost
breakdown models, are some of the tools used by the department to optimize the
negotiations. Inventory levels and payment options are also well-monitored in
order to efficiently employ our working capital.

      AmBev is in the final process of creating its National Procurement Center
to centralize the purchase of indirect materials and services and the sales of
industrial by-products. This new center is expected to gain leverage and
aggregate value, delivering better results. In order to accomplish this goal,
we rely on the latest technology used in the exchange of information exchange
between AmBev and its suppliers as well as an efficient on-line ordering
service via the company's intranet, maximizing the amounts and speed of orders
processed.

      We believe that most of our supply agreements for raw materials contain
standard commercial terms. We are not dependent on any one supplier for a
significant portion of its raw materials and the loss of any one or limited
group of suppliers would not have a materially adverse effect on its sources of


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supply. In recent years, we have not experienced any material difficulties in
obtaining adequate supplies of raw materials at satisfactory prices.

      We are also establishing a department to focus on the procurement of
marketing and advertisement products and services, searching for new and
alternative suppliers as part of our outsourcing strategy for these areas.
Furthermore, in 2003, AmBev expects to centralize the Material Requirement
Planning of the Material Requirement Order departments of all its plants, which
we expect will lower inventory costs.

      Beer

      The main raw materials used in our production are: malting barley, malt,
grits, corn syrup, rice, hops and water.

      o  BARLEY AND MALT: Malt requirements are met by domestic and
         international suppliers as well as our own malting facilities. We
         purchased up to 25% of our malt outside South America, at prevailing
         market rates, which depend partially on the quality of the barley
         harvests, and the remaining 75% within South America. We have the
         capacity to produce 70% of our malt needs from our own malting
         facilities in Brazil, Argentina and Uruguay. We can either sell part
         of our malt production to third parties or use it in our own
         production. We generally contract our annual malt needs in the last
         quarter of the year for the following year's requirements due to the
         different geographical areas of our producers, we minimize exposure
         to weather-related harvesting problems. Market prices of barley and
         malt have been relatively volatile. We believe that having our
         agreement with the producers and corporate production facilities
         helps to mitigate the impact of theses prices volatility in our
         operations.

      o  HOPS: There are two types of hops used in our beer production: hops
         used to give beer its distinctive bitter flavor, which we generally
         import from the United States, and hops used to give beer its
         distinctive aroma, which we generally import from Europe, purchasing
         from several international suppliers. Typical import contracts have a
         duration of three years.

      o  ADJUNCTS: Corn syrup, grits and rice are purchased locally, in Brazil
         on a regular basis. In the event of a forseeable decline in
         production, we anticipate our purchases in order to guarantee better
         commercial terms and the supply.

      o  WATER: Water represents a small portion of raw material costs. Water
         needs to be treated both before its use in the production process and
         before disposal. We obtain our water requirements from several
         sources, such as: lakes and reservoirs, deep wells located near our
         breweries, rivers adjoining our plants and public utilities
         companies. We monitor the quality, taste and composition of the water
         we use, and treat it to remove impurities and to comply with our own
         quality standards and applicable regulations. Advances in technology
         have reduced our water consumption per hectoliter produced. We do not
         foresee any shortage in our current water supply. All our facilities
         already have water treatment facilities and a
         conservation/productivity program has been successfully implemented.

            The water collection in AmBev's production facilities have the
      proper legal authorizations, being in compliance with the prevailing
      local laws for the management of hydro resources. In some states in
      Brazil the management of the hydro resources through governmental
      agencies is more developed, which could result in the introduction of a
      tax for its use during 2003.


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<PAGE>


      SOFT DRINKS

      The main raw materials used in the production of our soft drink products
are: concentrate (including guarana extract), sugar, sweetener, water and
carbon dioxide gas. Most of these materials are obtained from local suppliers.
We also have a 505-hectare facility that provides us with 50 to 60 tons of
guarana berries per year, or about 18% of our requirements, with the
remainder purchased directly from independent farmers in the Amazon region. We
produce our own concentrates for soft drink production of our proprietary
brands. The concentrate is mixed with sugar and carbonated water at our
facilities. The concentrate for Pepsi soft drink products is purchased from
PepsiCo.

      o     Sugar: Brazil is the biggest producer and exporter of sugar in the
            world and we therefore purchase from the domestic market.

      PACKAGING

   Packaging costs comprise the cost of non-returnable glass and PET bottles,
aluminum and steel cans, plastic film (shrink and stretch), paper labels,
plastic closures, metal crowns and paperboard. We use financial instruments to
hedge the aluminum costs which are U.S. dollar denominated. See "Quantitative
and Qualitative Disclosures About Market Risk". For other materials, we usually
set a fixed price for the period in accordance with the prevailing
macroeconomic conditions.

      Our main can suppliers are Latasa, Latapack Ball, Metalic and Crown-Cork.
We generally purchase all of the glass bottles used in packaging of our
products from St. Gobain Emballage, Owens-Illinois Glass Containers and
Companhia Industrial de Vidros. We obtain the labels for our beer and soft
drink primarily from local suppliers mostly from Grafica, a subsidiary of the
FAHZ. Plastic closures are principally purchased from Alcoa Aluminio and Crown
Cork. We also have a plant in Manaus that produces metal closures.

      Most of our plants have their own polyethylene terephthalate, or PET,
blowing facilities. PET is the material used to make one-way plastic bottles
for soft drinks. On-site PET blowing allows for substantial savings in
transportation and storage costs.

PROPERTY, PLANT AND EQUIPMENT

      Our properties consist primarily of brewing, malting, bottling,
distribution and office facilities in Brazil, Venezuela, Argentina, Uruguay and
Paraguay. Note that as a result of the Quinsa transaction, our beer brewing
assets were transferred to Quinsa.

      As of December 31, 2002 we owned 40 facilities, of which 34 were beverage
plants, including 14 breweries (11 in Brazil, one in Uruguay, and one each in
Venezuela and Paraguay); four soft drink plants (all in Brazil), which produce
Brahma, Pepsi and Antarctica brand soft drinks; one mineral water plant, and 15
mixed plants which produce both beer and soft drinks (14 in Brazil and one in
Argentina).

      Our aggregate beer and soft drink production capacity was 127.0 million
hectoliters per year. In 2002, due to the seasonality of our business, we
utilized 69.3% of our beer and 46.9% of our soft drink capacity in Brazil. Our
total annual beer production capacity is 89.7 million hectoliters, of which
84.4 million hectoliters is in Brazil, 2.5 million hectoliters in Argentina,
2.2 million hectoliters in Venezuela, 0.3 million hectoliters in Uruguay and
approximately 0.3 million hectoliters in Paraguay. Our total soft drink
production capacity is 37.3 million hectoliters, which includes the production
of both proprietary and Pepsi soft drinks.


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      We own all of our facilities in Brazil. The facilities and/or equipment
in Agudos, Jacarei, Minas Gerais, Nordeste, Aguas da Serra, Aguas
Claras (Sergipe), Aguas Claras do Sul, Nova Rio, Brasilia, Teresina,
Goiania, Manaus, Montenegro, Aquiraz, Santa Catarina, Cebrasa, Curitiba,
Natal, Jacarepagua, Jundiai and Sapucaia branches are encumbered by
mortgages to secure long-term loans from the Brazilian Economic and Social
Development Bank (BNDES), and other lenders. The mortgages were provided in
connection with financing provided to Brahma and Antarctica to modernize their
plants.

      We also own and operate four malt plants, one of which is in Brazil
(Maltaria Navegantes), one in Argentina (Malteria Pampa S.A.) and two in
Uruguay (Malteria Uruguay S.A. and Cympay S.A.), operate one concentrate
plant, one crown cap production facility, 490 hectares of agricultural land,
which we use for Guarana production and research (see more details under -
"Research & Development"), and three barley-growing facilities.

      In addition, we rent office facilities in Sao Paulo. The following is
a list of our principal production facilities:

BRAZIL:

PLANT                                     TYPE OF PLANT
-----                                     -------------
Agudos, Sao Paulo                         Beer
Brasilia, Federal District                Beer
Curitiba, Parana                          Beer
Equatorial, Maranhao                      Beer
Estrela, Rio Grande do Sul                Beer
Goiania, Goias                            Beer
Jacarei, Sao Paulo                        Beer
Lages, Santa Catarina                     Beer
Montenegro, Rio Grande do Sul             Beer
Natal, Rio Grande do Norte                Beer
Aguas da Serra, Sao Paulo                 Beer

Aguas Claras, Sergipe                     Mixed
Aquiraz, Rio Grande do Norte              Mixed
Camacari, Bahia                           Mixed
Cebrasa, Goias                            Mixed
Cuiaba, Mato Grosso                       Mixed
Jaguariuna, Sao Paulo                     Mixed
Jacarepagua, Rio de Janeiro               Mixed
Joao Pessoa, Paraiba                      Mixed
Nordeste, Pernambuco                      Mixed
Nova Rio, Rio de Janeiro                  Mixed
Manaus, Amazonas                          Mixed
Minas, Minas Gerais                       Mixed
Teresina, Piaui                           Mixed
Aguas Claras do Sul,  Rio Grande do Sul   Mixed

Curitibana, Parana                        Soft drinks
Contagem, Minas Gerais                    Soft drinks
Jundiai, Sao Paulo                        Soft drinks
Sapucaia, Rio Grande do Sul               Soft drinks

Manaus, Amazonas                          Crown Cap
Manaus, Amazonas                          Concentrate

Fratelli Vita, Bahia                      Water

Maltaria Navegantes-Porto Alegre          Malt



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INTERNATIONAL:

PLANT                                     TYPE OF PLANT
-----                                     -------------
CACN, Venezuela                           Beer
CCBA, Argentina                           Mixed
CCBP, Paraguay                            Beer
Patricia, Uruguay                         Beer
Cympay, Uruguay                           Malt
MUSA, Uruguay                             Malt
Malteria Pampa, Argentina                 Malt

      As part of the agreement relating to the acquisition of our interest in
Quinsa, in January 2003, AmBev's brewing facilities in Argentina, Uruguay, and
Paraguay were transferred as consideration to Quinsa. This transfer will allow
for the optimization of operating processes and enhancement of productivity in
the Southern Cone region.

      Two greenfield breweries will be constructed as part of our Latin
American expansion plan. Both of them, one in Guatemala and one in Peru, are
being built with more than 90% of their equipment transferred from other
facilities in Brazil and Paraguay, thereby optimizing the available over-
capacity released from Brahma-Antarctica integration and the increase of
productivity of our plants. This strategy allows AmBev to reduce its investment
needs in new plants. Total expected investment should amount to U.S.$50 million
and U.S.$38.0 million, in Guatemala and Peru, respectively, including
production facilities, working capital, pre-operating and operating expenses.

      We also use under-capacity assets to reduce logistics costs in Brazil.
For example, one of our can packaging lines will be transferred to our plant in
the state of Piaui during 2003, reducing our total can freight costs to that
region.

Insurance

      We insure our plants and equipment against damage or loss with reputable
insurers. We believe that the type and amount of insurance we carry conforms
with market practices for beverage companies and provides prudent levels of
coverage for risks associated with our operations.

Logistics

      AmBev divides its logistics management into three different dimensions:
long-term planning, short and medium-term planning and execution.

      On an annual basis, based on macro-economics trends and market knowledge,
AmBev prepares a demand forecast for the following five years. This forecast is
the major input of AmBev's logistics long-term planning (known as "Director
Plan"), whose main goal is to come up with the optimal plant footprint for this
period. When running this analysis, logistics must take into account external
and internal factors such as demand forecast, plants' capacities and efficiency
evolution, transportation costs, raw materials and labor availability, and
state taxes. It is during this analysis that we make important decisions such
as opening new plants, transferring assets, and increasing or decreasing
plants' capacities.




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      The output of our long-term planning becomes an input to our yearly
(short-term) budgeting process. We use the information generated in the
"Director Plan" to determine the volume of each SKU (Stock Keeping Unit) to be
produced every month at each of the plants. When running this analysis,
logistics must update the demand forecast based on the most recent information
obtained with the Sales Department. This production schedule will be the basis
for other areas' (particularly Manufacturing and Sourcing) planning.

      Every month, the demand forecast for the following two months is updated
and the logistics area reviews its production schedule for each of the plants.
When doing this, logistics must consider current capacity availability of each
plant, level of inventories, and actual transportation and production costs.
Manufacturing uses this information to adjust its daily production schedule and
finished goods inventory in order to meet demand requirements. Sourcing uses
this information to make its decisions regarding quantities to be purchased,
raw materials inventory levels, future purchasing contracts, and hedging
alternatives.

      Logistics also uses this production schedule to make our transportation
planning, taking into account lead times, costs, distances, and products' shelf
lives, among other items. We use a combination of cabotage, rail and road
modals to move raw materials and finished goods between suppliers, plants, and
distributors, always trying to reach the optimal combination of these different
modals. In order to take advantage of scale and to guarantee the optimization
of routes and intermodal, we centralized our transportation operation at our
Shared Services Center.

      RESEARCH & DEVELOPMENT AND KNOWLEDGE MANAGEMENT

      AmBev brings innovation and retains knowledge to its businesses primarily
through four areas: (1) its Technological Development Center (CDT), (2) its
Barley Development Program; (3) the Santa Helena Farm; and (4) the Engineering
Center.

      CDT

      Located in the site of Guarulhos Beer Plant, inside Sao Paulo
Metropolitan area, CDT runs a state-of-the-art 10 hl pilot brewery that
reproduces a plant in a smaller scale and allows AmBev to run complex tests. It
also has several specific laboratories to support development activities, such
as the packaging laboratory built in early 2002 after the creation of a
Packaging Innovation team. These labs are equipped to perform quality checks
and to produce samples for internal and consumer trials.

      As of May 2003, CDT had 18 employees, who are trained and sent to
relevant beverage events such as World Fairs. Their primary tasks are the
development of beer and non-alcoholic beverage new products, the execution of
laboratory and sensorial analysis, the development of new SPECs for both
liquids and packages, and the development of alternatives to reduce operational
costs. Because they retain great knowledge of our products and are a self-
renewing source of information to AmBev, these employees are carefully
recruited and closely monitored by our senior management.

      The CDT, in association with Marketing Intelligence and Innovation teams,
is responsible for the development of new products, including both liquid and
packaging materials. In 2002, AmBev introduced four new liquids, two in the
Brazilian Market, one in the Venezuelan market and one in the Argentine market.
All innovation activities performed by AmBev, both in Brazil and in any country
AmBev operates, should necessarily be conducted by this multi-functional group.

      Another major function of the CDT is to improve process performance and
to optimize production costs through the introduction of new raw materials and
processing aids. To do so, the CDT constantly observes the main trends in
Brewery Equipment and Production Technologies throughout the world.



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<PAGE>


When an opportunity is identified, the CDT must analyze advantages and
disadvantages, formally approve any change through a committee formed by
senior managers and monitor the introduction of changes directly in the field
until the new process is fully controlled.

      Barley Development Program

      AmBev Barley Development Program includes four experimental fields
located in Brazil, Uruguay and Argentina. The main objective of this program is
to develop new barley varieties to increase yield, improve disease resistance,
and increase malting quality and other traits of agronomic importance. All
varieties developed in this program are evaluated for brewing performance in
the CDT before being promoted to commercial levels and therefore cultivated in
large scale. As of May 2003, three AmBev varieties occupied approximately 50%
of the Brazilian barley area.

      Santa Helena Farm

      The Santa Helena Farm, located in the Amazon Rainforest at the Guarana
growing area in the city of Maues, is an important source of research and
development for AmBev. Over the last 30 years, AmBev has been investing in
research and development to improve genetic aspects of Guarana seeds at this
farm. There, we maintain the largest genetic bank of Guarana varieties in
the world. This program primarily intends to: (1) increase crop
productivity (Guarana production in Maues is expected to increase up to
eightfold); (2) develop a better resistance to mold diseases, the worst disease
for the Guarana plant, and (3) supply technical assistance and distribute
the selected material to the local growers in Maues. The Maues project is
also improving the economic development in the region.

      Corporate Engineering Center

      Located at the Jacarei plant, in the state of Sao Paulo, the
Corporate Engineering Center (CENG) is AmBev's fourth source of research and
development. The Center was created in 2001 and restructured in 2002, with the
intention of centralizing our technical expertise to facilitate the sharing and
dissemination of knowledge within our organization. In the 2002 restructuring,
the Central Laboratory-formerly in Rio de Janeiro-was also transferred to
Jacarei, fulfilling AmBev's goal to concentrate its technical experts at a
single site. Both facilities were created after searching, identifying, and
gathering the best specialists from every technical-related branch. Together,
they total about 75 professionals from Brazil and other Latin American
countries.

      The Corporate Engineering Center's team focuses their activities on: a)
reducing consumption of raw materials and improving losses control; b)
increasing quality control; c) increasing assets and man-hours productivity; d)
exploring new processes and technologies; e) developing new projects in
accordance with the capital expenditure budget; f) analyzing current and new
production methods and techniques; and g) running internal and external
benchmarking in order to ensure that the best practices are shared throughout
the entire company.

      It is also the responsibility of the Corporate Engineering Center to
manage AmBev's relationships with its technology partners such as consulting
experts and world leading brewers. For instance, we take advantage of our
business relations with Pepsi, Miller and Carlsberg to exchange information
regarding production technology and processes.



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Regulation

      GENERAL.

      In Brazil, it is illegal to sell or serve alcoholic beverages to persons
under 18 years of age. There are no significant regulations, other than
compliance with standards imposed by food and health regulatory agencies,
applicable to the production and marketing of soft drinks and non-carbonated
beverages in Brazil. In addition, there are no licensing requirements for
points of sale to sell our beer and soft drink products. For a description of
the environmental regulations we are subject to, see "-Regulation-Environmental
matters".

      Notwithstanding the foregoing, there always were several tries to improve
such regulation on the production and marketing of alcoholic beverages and,
recently, representatives in Congress have started new discussions on the
limitation of sale and marketing of alcoholic beverages (including beer). Most
of such proposed rules intends to reduce consumption of alcohol and the easy
access to such products by the young public, by determining new restrictions on
the marketing and sale of such products, including restrictions concerning
direct association of alcoholic beverages with sports (including financial
support of competitions, sport teams and athletes) and the inclusion of
warnings in the products advertising the consumers that alcohol beverages
consumption is not healthful.

      ENVIRONMENTAL MATTERS.

      We are subject to federal, state and local laws and regulations in
Brazil, Argentina, Venezuela, Uruguay and Paraguay relating to pollution, the
protection of the environment, the management and disposal of hazardous
materials and the clean-up of contaminated sites. In particular, these laws
regulate, among other things, air and effluent emissions and require hazardous
waste disposal sites to conform with environmental standards. Administrative,
criminal and civil penalties, including clean-up costs, may be imposed for non-
compliance with or liabilities under environmental laws.

      In addition to applicable laws, we are subject to compliance with World
Bank environmental standards pursuant to a loan facility entered into with the
International Finance Corporation (IFC). As part of our compliance with these
environmental standards, Brahma completed the upgrade of the wastewater
treatment systems at its facilities in 1995. Currently, we maintain modern
effluent treatment systems in each of our plants, which reduce organic
effluents by 95%, as required by applicable legislation. In addition, much of
our industrial waste, which is predominantly non-hazardous in nature, is either
recycled or sold to third parties.

      In 1998, one of Antarctica's subsidiaries, Antarctica da Amazonia
S.A., entered into an agreement with the Brazilian Federal Environmental
Agency, (IBAMA), under which it committed to maintain and preserve legally
protected areas under Brazilian environmental laws and native species of
Brazilian nut trees and rubber trees, which are part of the rural property of
Fazenda Santa Helena, and not to use some herbicide and biocide products in the
farming of guarana. Fazenda Santa Helena is a cultivation site for the
guarana seed, which is used as the main raw material in the production of
the guarana soft drinks. One of CBB's former subsidiaries, IBANN, was the
successor to Antarctica da Amazonia S.A.'s obligations under the agreement
with IBAMA. After November 1, 2001, AmBev assumed IBANN's obligations under the
agreement pursuant to the merger of IBANN into AmBev.

      Several years ago, we initiated an internal environmental policy program
to help ensure compliance with environmental regulations and, beginning in
1995, established an integrated environmental management system by hiring and
training environmental supervisors. After the combination, this policy was
extended to Antarctica's plants. Our environmental department includes
professionals who are exclusively dedicated to the environmental management of
our plants, regularly



                                      58


<PAGE>


reviewing and, if necessary, revising our environmental
policies, conducting environmental evaluations of our plants and training our
employees in environmental matters. In addition, we support environmentally
friendly projects, including a recycling project and urban community education
projects.

      Historically, Brahma and Antarctica have made, and AmBev continues to
make, significant capital expenditures to upgrade and maintain our facilities
in compliance with applicable environmental laws and requirements. Recent
expenditures incurred in Brazil, Argentina and Venezuela are as follows:

<TABLE>
<CAPTION>
<S>                                       <C>           <C>          <C>
                                                 YEAR ENDED DECEMBER 31,
                                        -----------------------------------
                                           2002        2001        2000
                                        --------    ----------   --------
                                                  (R$ in millions)

Property, plant and equipment.....         2.8         5.1         1.7
Waste treatment...................        38.8        51.1        34.2
                                        --------    ----------   --------
    Total.........................        41.6        56.2        35.9
                                        --------    ----------   --------
                                        --------    ----------   --------
</TABLE>

      We expect to spend similar amounts as those spent in the year 2002 on
maintaining and upgrading our facilities in upcoming years. We believe that our
current operations are in substantial compliance with applicable environmental
laws and regulations. We are, however, currently engaged in litigation under
Brazilian environmental laws and regulations relating to some of our
facilities. See "Financial Information-Consolidated Statements and Other
Financial Information-Legal Proceedings-Environmental Matters. "

Intellectual Property

      TRADEMARKS.

       As of May 9, 2003, we had 553 trademarks registered with the Brazilian
Institute of Industrial Property (INPI), and used third-party trademarks under
specific license agreements (Miller, Carlsberg, Gatorade, Pepsi and Lipton).
All of these trademarks are protected in all material respects in Brazil. In
addition, we have registered our main trademarks or initiated trademark
registration processes in approximately 100 countries outside of Brazil,
including Argentina, Venezuela, Uruguay, Paraguay, Portugal and the United
States, in order to ensure protection of the names and logos. As of May 9, 2003
we had 945 trademarks registered outside of Brazil.

      Our most important trademarks, including names, are the following:
AmBev, Brahma, Brahma Chopp, Skol, Sukita, Brahma Guarana, Caracu, Limao
Brahma, Malzbier, Fratelli Vita, Marathon, Antarctica, Antarctica Pilsen,
Bohemia, Guarana Antarctica, Polar Pinguim, Polar Export, Kronenbier,
Bare, Bare-Cola and Guarana Champagne (registered in Brazil),
Guarana Antarctica (registered outside of Brazil), Soda Limonada Antarctica,
Agua Tonica Antarctica, and Nectar. There are no unregistered trademarks
in Brazil which are material to our business. In Brazil, trademark registration
has a term of validity of 10 years, after which it can be renewed for
additional 10-year periods. The application for renewal of a trademark must be
submitted to the INPI in the last year of validity of the trademark
registration, or within six months after the trademark expiration date upon
payment of an additional fee. INPI only refuses a renewal in the event that any
third party argues that the trademark has lapsed due to lack of use during the
prior five years, and such fact is deemed by the INPI to have been proven. We
expect to apply for renewal of registration of all of its material trademarks,
so as to avoid their expiration. We do not expect any of our material
trademarks to lapse in the near future. We believe that our significant
trademarks are protected in all material respects in the markets in which we
currently operate.


                                      59


<PAGE>


Organizational Structure

      AmBev is a holding company. The bulk of our operations are conducted
through one principal operating subsidiary (CBB). Additionally, AmBev acquired
on January 31, 2003 an initial economic interest of 40.475% in Quinsa, which is
a holding company with operating subsidiaries in five countries.

      The principal component of the restructuring performed in 2002 was the
repurchase of the remaining minority interest in Polar and Astra.

      The following chart illustrates the ownership structure of AmBev's
principal subsidiaries as of March 31, 2003 based on voting share capital
owned. For a complete list of our material subsidiaries, see Exhibit 8.1 to
this annual report.




                           ORGANIZATIONAL STRUCTURE


                AmBev and its Principal Operating Subsidiaries


<TABLE>
<CAPTION>
<S>             <C>             <C>                 <C>                     <C>                  <C>                <C>



                                                     |-------------|
                                                     |    ABBEV    |
                                                     |-------------|                             |-------------|
                                                             |                                   |   AROSUCO   |
                                                             |-----------------------------------|-------------|
                                                             |                                   |AmBev  99.70%|
                             |-------------------------------------------------------|           |Skol    0.30%|
                             |          |                                            |           |-------------|
                             |          |                                            |
                             |  |---------------|                           |------------------|
                             |  |    AGREGA     |                           |       CBB        |
                             |  |---------------|                           |------------------|
                             |  |AmBev    50.00%|                           |AmBev       99.99%|
                             |  |Others   50.00%|                           |Others       0.01%|
                             |  |---------------|                           |------------------|
                             |                                                       |
                             |                                |-------------------------------------------------------------|
                             |                                |                      |                  |         |         |
                             |  |---------------|   |---------------------| |------------------| |--------------| | |--------------|
                             |  |     EAGLE     |   |  Lambic Holding SA  | |HOHNHECK Argentina| |    SKOL      | | |      ANEP    |
                             |--|---------------|   |---------------------| |------------------| |--------------| | |--------------|
                                |AmBev   100.00%|   |CBB            87.33%| |AmBev        0.00%| |CBB     99.96%| | |CBB    100.00%|
                                |               |   |Lince          12.67%| |CBB         50.69%| |Others   0.04%| | |--------------|
                                |               |   |                     | |SKOL        49.31%| |--------------| |         |
                                |---------------|   |---------------------| |------------------|        |         |         |
                                        |                     |                      |                  |         |         |
      |----------------|----------------|                     |                      |                  |         |         |
      |                |                |                     |                      |                  |         |         |
|-------------| |-------------| |---------------|   |---------------------| |------------------|        |         | |--------------|
|   ASPEN     | |   BRAHMACO  | |  JALUA Spain  |   |     Lambic Chile    | | Hohneck  Chile   | |--------------| | | IBA SUBESTE  |
|-------------| |-------------| |---------------|   |---------------------| |------------------| |     CRBS     | | |--------------|
|Eagle 100.00%| |Eagle 100.00%| |Eagle   100.00%|   |Lambic Holding 99.99%| |Hohnbeck Arg      | |--------------| | |Anep    82.92%|
|             | |             | |CBB       0.00%|   |Hohneck Chile   0.01%| |           100.00%| |CBB     99.79%|-|-|CBB     16.00%|
|-------------| |-------------| |---------------|   |---------------------| |------------------| |Others   0.21%| | |Others   1.08%|
      |                                |                      |                      |           |--------------| | |--------------|
      |                                |                      |                      |                            |         |
      |                                |                      |                      |                            |         |
|-------------|                 |---------------|   |---------------------| |------------------| |--------------| | |--------------|
|   CYMPAY    |                 |   MONTHIERS   |   |       NCAQ          | |    DUNVEGAN      | |  PEPSI ENG.  | | |    DISBAM    |
|-------------|                 |---------------|   |---------------------| |------------------| |--------------| | |--------------|
|Aspen  97.28%|                 |Julua Spain    |-| |Lambic Chile  100.00%| |Hohnbeck Chile    | |CBB     99.44%|-|-|Sudeste 99.55%|
|Others  2.72%|                 |        100.00%| | |                     | |           100.00%| |Skol     0.56%| | |Anep     0.55%|
|-------------|                 |---------------| | |---------------------| |------------------| |--------------| | |--------------|
                                                  |           |                     |                             |
                                                  |           |---------------------|                             |
                                                  |                      |                                        |
                |-------------| |---------------| |           |---------------------|           |---------------| |
                |    CACN     | |      UBL      | |           |       QUINSA        |           |    ASTRA      | |
                |-------------| |---------------| |           |---------------------|           |---------------| |
                |UBL    98.39%| |Monthiers51.00%| |           |Dunvegan       32.63%|           |CBB      97.20%|-|
                |Others  1.61%| |Others   49.00%| |           |NCAQ            3.71%|           |Others    2.80%| |
                |-------------| |---------------| |           |Others         63.66%|           |---------------| |
                                                  |           |---------------------|                             |
                                                  |                      |                                        |
                                |---------------| |           |---------------------|           |---------------| | |--------------|
                                |MALTARIA PAMPA | |           |         QIB         |           |      ITB      | | | FAZ DO POCO  |
                                |---------------| |           |---------------------|           |---------------| | |--------------|
                                |CBB      60.00%|-|           |Quinsa         85.00%|           |CBB      50.00%|-|-|CBB     84.09%|
                                |Montiers 40.00%|             |Dunvegan        8.60%|           |(Fratelli)     | | |
                                |               |             |BAC             6.40%|           |Others   50.00%| | |Anep    15.91%|
                                |---------------|             |---------------------|           |---------------| | |--------------|
                                        |                                                                         |
                                |---------------|                                                                 |
                                |   MALATARIA   |                                               |---------------| |
                                |   URUGUAY     |                                               |    DAHLEN     | |
                                |---------------|                                               |---------------| |
                                |Malt.   100.00%|                                               |CBB     100.00%|-|
                                |Pampa          |                                               |               |
                                |               |                                               |---------------|
                                |---------------|


</TABLE>
                                      60


<PAGE>


Operating and Financial Review and Prospects

                               OPERATING RESULTS

Introduction

      This section contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those discussed in
the forward-looking statements as a result of various factors including,
without limitation, those set forth in "Cautionary Statement Regarding Forward-
Looking Information" and the matters set forth in this annual report generally.

      We have prepared our audited annual consolidated financial statements as
of December 31, 2002, 2001 and 2000 and for the three years ended December 31,
2002 in Brazilian reais in accordance with Brazilian GAAP, which differs in
certain significant respects from U.S. GAAP. The audited financial statements
included elsewhere in this annual report have been prepared in accordance with
Brazilian GAAP and include a reconciliation of net income and shareholders'
equity to U.S. GAAP, a discussion of the reconciling differences in accounting
principles, and the presentation of the U.S. GAAP condensed balance sheets and
statements of operations in Brazilian reais.

      AmBev's discussion and analysis of its financial condition and results of
operations are based upon its primary financial statements. As a result, the
financial information and related discussion and analysis contained in this
Item are in accordance with Brazilian GAAP and figures are in reais, unless
otherwise stated.

Critical Accounting Policies

      Critical accounting policies are those that are both important to the
portrayal of our financial condition and results and require our management's
most difficult, subjective or complex judgments, often as a result of the need
to make estimates about the effect of matters that are inherently uncertain. As
the number of variables and assumptions affecting the possible future
resolution of the uncertainties increase, those judgments become even more
subjective and complex. In order to provide an understanding about how our
management forms its judgments about future events, including the variables and
assumptions underlying the estimates, and the sensitivity of those judgments to
different circumstances, we have identified the following critical accounting
policies:

            o  Goodwill, Intangible Assets and Amortization

            o  Pensions, Employee Benefits and the Consolidation of The FAHZ

            o  Contingencies

            o  Deferred tax

            o  Accounting for derivatives

      GOODWILL, INTANGIBLE ASSETS AND AMORTIZATION

      We have made acquisitions that included a significant amount of goodwill
and other intangible assets. The accounting for goodwill and intangible assets
under Brazilian GAAP remains unchanged, with goodwill amortized over defined
finite periods, as disclosed in note 2 (j) to our financial statements.


                                      61


<PAGE>


      Under Brazilian GAAP, net goodwill was R$626.9 million and R$617.6
million at December 31, 2002 and 2001, respectively. This was net of
accumulated amortization of R$331.3 million and R$226.0 million, respectively,
and negative goodwill of R$149.9 million and R$164.7 million, respectively. The
amortization charge for the purposes of Brazilian GAAP was R$105.3 million for
the year ended December 31, 2002 and R$94.2 million for the year ended December
31, 2001.

      Under U.S. GAAP, net goodwill was R$249.5 million and R$195.6 million at
December 31, 2002 and 2001, respectively. SFAS No. 142, "Goodwill and Other
Intangible Assets," became effective for acquisitions after June 30, 2001. This
standard requires that goodwill no longer be amortized but tested annually for
impairment, and we therefore ceased to amortize goodwill as from January 1,
2002. The amortization expense under U.S. GAAP related to goodwill and
intangible assets for the year ended December 31, 2001 was R$35.8 million, and
was nil for the year ended December 31, 2002.

      Our goodwill was grouped into reporting units and tested for impairment
in 2002 under the guidance of SFAS No. 142. Reassessment of lives of all
intangible assets and specific tests for impairment of intangible assets with
finite lives will continue to be performed annually to determine the need for
impairment provisions and whenever events or changes in circumstances indicate
that its carrying value may not be recoverable. Factors which could trigger an
impairment adjustment include the following:

         o   significant underperformance relative to expected historical or
             projected future operating results of reporting units,

         o   significant changes in the manner we used the acquired assets or
             the strategy for our overall business or use of trade names, or

         o   significant negative industry or economic trends.

      We performed the impairment test and determined that no goodwill
impairment existed at December 31, 2002.


      EMPLOYEE BENEFITS-AND THE CONSOLIDATION OF  THE FAHZ

      The FAHZ, one of our three controlling shareholders, provides medical,
dental, educational and social assistance to our current and retired employees,
as well as their beneficiaries and dependents, as discussed in note 14 (c) to
the financial statements included elsewhere in this report. Prior to the
combination with Antarctica, Brahma also provided the same benefits through the
Brahma Welfare Foundation (BWF). The assets of the BWF were merged into the
FAHZ on October 27, 2000 and the former ceased to exist.

      We can contribute up to 10% of our consolidated net income to support the
FAHZ. At December 31, 2002, the FAHZ owned 23.32% of our voting shares and
10.74% of our total shares. See " Major Shareholders and Related Party
Transactions".

         BRAZILIAN GAAP ACCOUNTING

      The FAHZ is a legally distinct entity for the purposes of Brazilian GAAP.
Under Brazilian GAAP, we do not consolidate the assets and liabilities of the
FAHZ within our financial statements. Similarly, the assets and liabilities of
the BWF were not consolidated in Brahma's financial statements.

      Under Brazilian GAAP, we account for all benefit obligations provided by
the company, including those in relation to the FAHZ, in accordance with the
release by the Brazilian Institute of


                                      62


<PAGE>


Independent Auditors, or IBRACON of Accounting Standard and Procedure NPC No.
26, "Pensions and Post-retirement benefits" in December 2000. This requires
the comprehensive recording of pension obligations and expenses on an
actuarial basis. Accordingly, as permitted by NPC No. 26, we reduced
shareholders' equity at December 31, 2001 to reflect the accumulated
obligation for the actuarial liability to represent the contributions due to
the FAHZ by R$40.6 million (R$61.5 million, net of R$20.9 million deferred
tax). Prior to the implementation of NPC No. 26, for the year ended December
31, 2000, AmBev Brahma expensed all pension and post- retirement
contributions, including those made to the FAHZ, directly to the statement of
operations on an accrual basis without recognition of the actuarial
obligation. From January 1, 2002, AmBev recognized in income a charge to
pensions and post-retirement benefits to reflect the change in the actuarial
obligation, less the fair value of plan assets and the effect of deferrals.

      Plan assets include amounts contributed by AmBev and its employees and
amounts earned from investing the contributions, less benefits paid. Following
an actuarial review of the defined benefits plan which had been closed to new
participants, the net assets at December 31, 2001 were considered to be in
excess of that required to meet the projected benefit obligation. Although
AmBev will reduce future employer contributions to the minimum permitted by
law, Brazilian pension regulations currently provide no means for returning
this surplus to the sponsor. In view of this uncertainty, on December 31, 2001,
AmBev included in the actuarial determination of the pension obligation at
December 31, 2001 a valuation allowance of R$144.8 million against the plan
assets. This allowance will affect the pension charge/ benefit as from 2002.


         U.S. GAAP ACCOUNTING

      Under U.S. GAAP, the assets and liabilities of the FAHZ are consolidated
within AmBev. These assets would not be distributable to shareholders in the
event of a bankruptcy. A substantial part of these assets are represented by
shares in AmBev and have been reflected as treasury shares thereby reducing the
number of outstanding shares and affecting the determination of earnings per
share under U.S. GAAP.

      Under U. S GAAP, we account for post-retirement benefits in accordance
with SFAS No. 106 "Employees Accounting for Post-retirement Benefits and Other
Obligations". We have recorded an accrued liability, based on independent
actuarial reports at the end of each period, for the retirement element of the
obligations applicable to the FAHZ.

      Several statistical and other factors which attempt to anticipate future
events are used in calculating the expense and liability related to our pension
and employee benefit plans. These factors include assumptions about the
discount rate, expected return on plan assets and rate of future compensation
increases as determined by us, within certain guidelines. In addition, our
actuarial consultants also use subjective factors, such as withdrawal, turnover
and mortality rates, to estimate these factors. The actuarial assumptions we
use may differ materially from our actual results, due to changing market and
economic conditions, regulatory events, judicial rulings, higher or lower
withdrawal rates or longer or shorter life spans of participants.

      As confirmed by a meeting of the AICPA International Practices Task Force
on November 25, 2002, U.S. GAAP does not provide for valuation allowances
against a pension asset. The reconciliation to U.S. GAAP as at and for the year
ended December 31, 2002 includes a R$19.0 million adjustment to reverse the
effects of the valuation allowance.

      CONTINGENCIES

      The preparation of our financial statements requires our management to
make estimates and assumptions regarding contingencies which affect the
valuation of assets and liabilities at the date of the


                                      63


<PAGE>


financial statements and the revenues and expenses during the reported period.
The most significant of these are as follows:

         LEGAL CONTINGENCIES

      We are currently involved in certain legal proceedings, as discussed in
"Financial Information-Legal Proceedings". In the future, management may make
decisions which impact the structure, operations, and staffing of the company,
which  may result in further claims. Fundamental changes in economic conditions
may also result in similar restructuring strategies. We have recorded
liabilities on pending litigation based on estimates of the amounts and the
range of the losses. Unless impacted by changes in accounting standards and
practices, we intend to continue to record these liabilities in the same
manner, based on our assessment of the exposures at that time. However, our
assumptions and estimates may change in the future based on our assessment of
any given situation, which may result in changes in future provisioning for
legal claims.

         LABOR CLAIMS

      Management is required to make estimates of the potential losses on
outstanding labor claims based on the advice of external legal counsel on the
likelihood of successful outcome. When external counsel advise us that it is
probable that our case will not prevail we record provisions against these
exposures based on estimated loss amounts. Brazilian employment and labor
legislation is extensive and complex, giving rise to many claims from current
and former employees against us or our subsidiaries. These claims relate
principally to dismissals, severance, health and safety, supplementary
retirement benefits and other matters.

         TAX CONTINGENCIES

      The complexity of the Brazilian corporate fiscal environment often
results in disputes over a number of different taxes. We are currently involved
in certain tax proceedings and have filed claims to avoid payment of taxes that
we do not believe are constitutional. As discussed in note 17 to our financial
statements, we have accrued the costs for the resolution of the losses when we
consider loss of our claim to be probable. The tax contingencies relate
primarily to value-added sales and excise taxes, taxes on revenue and income
taxes and are described in detail in the financial statements. The estimates
are developed in consultation with external legal counsel and are based upon an
analysis of potential results, assuming a combination of litigation and
settlement strategies. We do not believe these proceedings will have a material
adverse effect on our financial position. It is possible, however, that future
results of operations could be materially affected by changes in our
assumptions, and the effectiveness of our strategies with respect to these
proceedings.

         UNRECOGNIZED EXPOSURES

      We have not provided for every potential legal or tax claim, but only for
those  in which we consider loss to be probable. We have estimated the total
unrecorded exposures of possible losses to be R$976.0 million at December 31,
2002. We believe that our estimates are based on reasonable assumptions and
assessments of external legal counsel, but should the worst case scenario
develop, and we were subject to losses on all cases, our net impact on the
statement of operations would be an expense of this amount.

      DEFERRED TAX

      We recognize deferred tax assets and liabilities based on the differences
between the financial statement carrying amounts and the tax basis of our
assets and liabilities. We regularly review the deferred


                                      64


<PAGE>


tax assets for recoverability and will only recognize these if we believe that
it is probable (under Brazilian GAAP) or more-likely-than not (under U.S.
GAAP) that there will be sufficient taxable profit against any temporary
differences that can be utilized, based on historical taxable income,
projected future taxable income, and the expected timing of the reversals of
existing temporary differences. Pursuant to CVM regulations, under Brazilian
GAAP, the company must demonstrate that it will recover the tax assets
discounted to present value based on expected realization dates, within a
10-year period.

      In the event we or one of our subsidiaries operate at a loss or are
unable to generate sufficient future taxable income, or if there is a material
change in the actual effective tax rates or time period within which the
underlying temporary differences become taxable or deductible, we evaluate the
need to establish a valuation allowance against all or a significant portion of
our deferred tax assets resulting in an increase in our effective tax rate.

      In October 2000, after conducting certain tax restructuring initiatives,
we decided that we would no longer provide deferred tax on the earnings
generated by our foreign subsidiaries. Based on the advice of external counsel,
we concluded at first that these earnings are not taxable on remission to
Brazil. The Brazilian fiscal authorities introduced new legislation  in the
third quarter of 2001 to subject offshore earnings to income tax in Brazil from
December 31, 2002, regardless of whether earnings have been remitted to Brazil,
and to restrict tax planning measures that had been available to companies in
Brazil, and that we have made use of in the past. We continue to believe that
the current tax initiatives that we are undertaking will not result in taxes on
these earnings, based on the advice of external counsel and we have not
therefore recorded a liability for such taxes in our financial statements.

      As part of the 1997 Pepsi transaction, we acquired the conditional right
to certain tax assets. Had we utilized the assets within the period which
expired in October 2002, 80% of the benefit would have been returned to the
seller. Under Brazilian GAAP and U.S. GAAP, we recognized 20% of the tax asset
at the time of the acquisition and recorded a valuation allowance against the
80%. As we are confident that it is more likely than not that the further 80%
will now be recovered under U.S. GAAP, we recorded a tax benefit of R$148.0
million in 2002 to reflect the tax loss carryforwards no longer subject to
contingent utilization. This amount was taken directly as a benefit to the
statement of operations under U.S. GAAP, as opposed to an increase in the
goodwill of the Pepsi transaction, to reflect the lifting of the restrictions
which placed recoverability in doubt. We did not record the tax asset
equivalent to 80% of the available tax losses under Brazilian GAAP.

      Certain other tax assets arising from the Brazilian GAAP purchase price
adjustments at the time of the Brahma and Antarctica combination and the
subsequent downstream merger of Antarctica have not been recorded as recovery
is not presently considered probable.

      ACCOUNTING FOR DERIVATIVES

         BRAZILIAN GAAP ACCOUNTING

      We enter into foreign currency forward, swap and future contract
agreements (principally for U.S. dollars) to mitigate foreign exchange risk on
U.S. dollar-denominated debt, financing of imports and payables to foreign
suppliers. All of these agreements are marked-to-market and the realized and
unrealized gains and losses on these financial instruments used to manage
foreign currency cash flow exposures are reported in the statement of
operations and included in "Financial income" and "Financial expenses".

      Brazilian GAAP requires us to disclose the fair value of financial
instruments at the balance sheet date but does not require us to record the
unrealized market-to-market fair value gains and losses in income in the year.
The estimated fair value amounts have been determined by the Company using


                                      65


<PAGE>


available market information and appropriate valuation methodologies. However,
considerable judgment is necessarily required in interpreting market data to
develop the estimates of fair value.

         Commodities

      Financial instruments used to mitigate commodity price risk are recorded
at fair market value. Unrealized gains at December 31, 2002 on these contracts
not yet closed out totaled R$4.9 million and these will only be recognized in
the statement of operations when realized. Realized gains on commodity
contracts closed during 2002 amounted to R$345.6 million and these were
recognized in Cost of sales in the statement of operations to match the
associated commodity currency cost. Additionally, credits of R$11.8 million and
R$14.2 million, respectively, were recognized against General and
administrative expenses and selling expenses, respectively, reducing our
foreign currency denominated expenses.

         Interest and Foreign Currencies

      The fair value of the financial assets provide a shelter for the currency
and interest rate risks accruing from the financial liabilities. Although the
Company's intention is to maintain these assets, they could be realized at the
Company's discretion. Should these instruments be settled only on their
respective maturity dates, the negative effect between the market value and
estimated yield curve of the instruments would be totally eliminated. Had the
Company been able to adopt the same criterion to recognize its financial
liabilities at market value, it would have presented an unrealized pre-tax gain
of approximately R$461.6 million at December 31, 2002 as below:

<TABLE>
<CAPTION>
<S>                    <C> <C>        <C> <C> <C>       <C> <C>
Financial liabilities         Book value        Fair  value       Unrealized gain

Notes                          R$1,775.9         R$1,377.4             R$398.5
Syndicated loan                  1,157.8           1,103.5                54.3
Raw material financing             105.6              96.7                 8.9
                              ----------        ----------            ----------
                               R$3,039.3         R$2,577.7             R$461.6
                              ----------        ----------            ----------
</TABLE>

      Prior to 2002, fair value gains and losses on these derivative
instruments when compared to the effects at December 31, 2002 were not
significant. The reversal of the unrealized losses determined at December 31,
2002 may significantly benefit reported income in future periods.

         U.S. GAAP ACCOUNTING

      All derivative financial instrument agreements are marked-to-market and
the realized and unrealized gains and losses on these financial instruments
used to manage foreign currency cash flow exposures are reported in the
statement of operations and included in "Financial income" and "Financial
expenses". We have not classified any of our derivative transactions as cash
flow or fair value hedges to date.

U.S. GAAP RECONCILIATION

      Our net income in accordance with Brazilian GAAP was R$1.510.3 million in
2002, R$784.6 million in 2001 and R$470.2 million in 2000. Under U.S. GAAP, we
would have reported net income of R$1,642.2 million in 2002, R$840.1 million in
2001 and R$879.2 million in 2000.


                                      66


<PAGE>


      Our shareholders' equity in accordance with Brazilian GAAP was R$4,129.6
million in 2002, R$3,363.5 million in 2001 and R$3,077.0 million in 2000. Under
U.S. GAAP, we would have reported shareholders' equity of R$3,960.6 million in
2002, R$2,839.9 million in 2001 and R$2,378.2 million in 2000.

      The principal differences between Brazilian GAAP and U.S. GAAP that
affect our net income  in 2000, 2001 and 2002, as well as shareholders' equity
at December 31, 2000, 2001 and 2002, relate to the treatment of the following
items:

         o   Under Brazilian GAAP, the combination of the two predecessor
             companies Brahma and Antarctica which was accounted for in a
             manner similar to a pooling-of-interest under Brazilian GAAP; for
             the purposes of U.S. GAAP, the transaction was treated as an
             acquisition by Brahma of Antarctica;

         o   Under Brazilian GAAP inflation accounting was discontinued
             effective January 1, 1996. Prior to that date, Brazilian GAAP
             statements included indexation adjustments which partially
             accounted for the effect of inflation on property, plant and
             equipment, investments, deferred charges and shareholders'
             equity, and reported the net charge or credit in the statement of
             operations; for the purposes of U.S. GAAP, Brazil ceased to be
             treated as a highly inflationary economy only as from January 1,
             1998. Therefore the financial information for purposes of U.S.
             GAAP for the two-year period ended December 31, 1997 include
             additional inflation restatement adjustments made by applying the
             IGP-M to permanent assets and shareholders' equity. This results
             in additional inflation adjustments as at December 31, 2002 and
             2001;

         o   Under Brazilian GAAP, Brazil ceased to be a high inflationary
             economy on January 1, 1996, as opposed to January 1, 1998 under
             U. S GAAP. Accordingly, we continued to use inflation accounting
             in our U.S. GAAP financial statements for the period from January
             1, 1996 to December 31, 1997, which impacted our permanent assets
             (property, plant and equipment and short-term investments) and
             shareholders' equity. The financial statements of the
             subsidiaries in Argentina and Venezuela included inflation
             accounting adjustments under Brazilian GAAP in 2002 which were
             reversed under U.S. GAAP;

         o   The FAHZ, which provides medical, dental, educational and social
             assistance to current and former employees, has been consolidated
             for the purposes of U.S. GAAP to reflect the significant
             influence that AmBev exerts over the investment decisions of the
             FAHZ, in recognition that benefits it does provide are almost
             exclusively to our current and former employees. Under Brazilian
             GAAP, we have not consolidated the FAHZ. See "-Critical
             Accounting Policies-Employee Benefits-The FAHZ";

         o   Under Brazilian GAAP, 80% of the Pepsi deferred tax assets
             acquired on the Pepsi transaction in 1997 have not been
             recognized due to the more stringent recognition criteria; for
             the purposes of the U.S. GAAP, the valuation allowance held
             against 80% of the assets was released in 2002;

         o   Under Brazilian GAAP, prior to 2002, the expenses related to
             pension plans and other post-retirement benefits, which were
             recognized on an accrual basis only to the extent of required
             contributions for the relevant year or financial period. These
             expenses were fully recorded on an actuarial basis under U.S.
             GAAP;


                                      67


<PAGE>


         o   Under Brazilian GAAP, financing charges from borrowings used in
             construction were not capitalized prior to 1998; for the purposes
             of U.S. GAAP, capitalization of the interest expense on borrowed
             funds, excluding foreign exchange losses, during construction of
             major facilities is recognized as part of the cost of the related
             assets;

         o   Under Brazilian GAAP, dividends proposed by management are
             required to be accrued in the financial statements; for the
             purposes of U.S. GAAP, these may not be accrued until ratified by
             the Shareholders Meeting;

         o   Under U.S. GAAP, beginning on January 1, 2002, goodwill is no
             longer amortized but tested annually for impairment. Goodwill
             continues to be amortized for Brazilian GAAP purposes; and

         o   There are a number of expenses and charges which can be
             capitalized and deferred under Brazilian GAAP, which are expensed
             under U.S. GAAP.

      Our audited financial statements included elsewhere in this report
provides for a fuller description of these differences and a reconciliation of
net income and total shareholders' equity from Brazilian GAAP to U.S. GAAP.

ACCOUNTING ASPECTS OF THE COMBINATION

      Prior to July 1, 1999, the date of the combination of Brahma and
Antarctica and the controlling shareholders' contribution, AmBev had no
material assets, liabilities or operations. For legal purposes, AmBev was
created by the merger of Brahma and Antarctica and became the successor company
as at that date. For purposes of Brazilian statutory, legal and accounting
records, we accounted for the combination in a manner similar to a pooling-of-
interests in accordance with Brazilian GAAP. Under this accounting method, the
recorded assets and liabilities of Brahma and Antarctica were carried over to
AmBev's consolidated financial statements at their historical amounts. The
combination did not qualify for a pooling-of-interests under U.S. GAAP, for
which purposes the combination was recorded using the purchase method of
accounting. For U.S. GAAP purposes, AmBev is treated as the successor to
Brahma. As a result, the financial statements of AmBev as of and for the year
ended December 31, 1999 are the financial statements of Brahma as of such date
and for such period. As described in note 2(a) to the financial statements, the
financial statements of AmBev as of any date and for any period ended after
December 31, 1999, reflect the combination of Brahma and Antarctica. The impact
of these differences has been included in the reconciliation to U.S. GAAP in
note 21.2 to the financial statements.

ACCOUNTING ASPECTS OF THE QUINSA TRANSACTION

      On January 31, 2003, we consummated the acquisition of a 40.475% initial
economic interest in Quinsa. See "Information of the Company-Acquisition of
Interest in Quinsa". The operations and financial results of Quinsa, as well as
the accounting impact of the acquisition, are not reflected in our financial
statements as at and for the year ended December 31, 2002. Our first quarter
financial statements for the year 2003, filed with the CVM under Brazilian GAAP
on May 9, 2003 include the financial results of Quinsa on a proportional
consolidated basis. For U.S. GAAP purposes, our interest in Quinsa cannot be
consolidated on a proportional basis, but will be accounted for under the
equity method for the year ending December 31, 2003.


                                      68


<PAGE>


FUTURE IMPACT OF QUINSA

      The acquisition of our initial 40.475% economic interest in Quinsa,
consummated on January 31, 2003, is expected to impact our future trends as the
results of Quinsa will be reflected in our 2003 financial statements. On
January 31, 2003 AmBev acquired 37.5% of the total capital of Quinsa, which in
turn owns 85.0% of QIB. We have also acquired an additional 8.6% of the shares
of QIB from Heineken. As a result, at January 31, 2003, we had a total 40.475%
economic interest in Quinsa. For the purposes of Brazilian GAAP, beginning on
January 31, 2003, Quinsa will be proportionally consolidated in our 2003
financial statements.

      Quinsa did not prepare Brazilian GAAP financial information for 2002. In
order to provide comparable data to demonstrate the potential impact on our
results and trends in 2003,  we have included in the tables below some key
financial indicators as at March 31, 2003 and for the two months ended March
31, 2003 of Quinsa, under Brazilian GAAP, as well as our interest of those
results included in our condensed financial information for the first quarter
of 2003, filed with the CVM on May, 9 2003:

<TABLE>
<CAPTION>
<S>                                             <C>                    <C>
STATEMENT OF OPERATIONS                       QUINSA
                                          FEBRUARY/MARCH              AMBEV'S
                                            2003-GROSS(1)             SHARE(2)
                                          ---------------          ------------
                                                      ( R$ in millions)

Gross Sales...................                458.1                   85.4
Net Sales.....................                362.4                   46.7
Cost of Sales.................               (190.2)                 (77.0)
Gross Profit..................                172.2                   69.7
Operating Income..............                161.7                   65.5
Net Income....................                118.3                   47.9

(1) Translated from Quinsa's statement of operations prepared under Brazilian
GAAP in U.S. dollars using an exchange rate of R$3.3531 per U.S. dollar.

(2) Represents 40.475% of the results of Quinsa for the two month period ended
March 31, 2003.
</TABLE>


<TABLE>
<CAPTION>
<S>                                                <C>                 <C>
                                                                      AMBEV'S
BALANCE SHEET                                 QUINSA                   SHARE
                                               GROSS                  MARCH 31,
                                          MARCH 31, 2003(1)           2003(2)
                                         ------------------          -------------
                                                        (R$ in millions)

Current assets                                974.4                   394.4
Long term assets                              218.8                    88.6
Property, plant and equipment               2,810.7                 1,137.6

Short term borrowings                       1,076.8                   435.8
Other short term liabilities                  319.0                   129.2

Long term borrowings                          171.5                    69.4
Other long term liabilities                   251.7                   101.9

Minority Interest                             417.8                   169.1
SHAREHOLDERS' EQUITY                        1,767.1                   715.2
</TABLE>

(1) Translated from Quinsa's balance sheet prepared under Brazilian GAAP in U.S.
dollars using an exchange rate of R$3.3531 per U.S. dollar.

(2) Represents 40.475% of our interest in Quinsa as at March 31, 2003.


                                      69


<PAGE>


      AmBev's share of the statement of operations and balance sheet presented
under Brazilian GAAP are expected to be combined with the corresponding
financial information of AmBev and reported in our annual financial statements
prepared under Brazilian GAAP as at and for the year ending December 31, 2003.
For the purposes of U.S. GAAP, we expect to report our interest in Quinsa,
unless we acquire a controlling interest or are otherwise required to
consolidate Quinsa under U.S. GAAP, on an equity accounting basis and not on a
proportional consolidation basis as required by the CVM under Brazilian GAAP.

      At December 31, 2002 and March 31, 2003, Quinsa was in default of certain
loan covenants. Quinsa management is currently renegotiating the terms and
conditions of certain loans. See "-Liquidity and Capital Resources".

      As of June 16, 2003, AmBev had acquired an additional 1.1 million Class B
shares of Quinsa in the open market, resulting in an increase in its total
economic interest in Quinsa to 41.217%. For further details on the acquisition,
the business of Quinsa and anti-trust matters, refer to "Information on the
Company-Acquisition of Interest in Quinsa". Further information is available
through the annual report filed with the SEC. The Quinsa filings are not
incorporated by reference in our annual report.

OTHER ACQUISITIONS/DISPOSITIONS AND ACCOUNTING IMPLICATIONS

      Astra

      Between June and December 2001, we also acquired 11.328 million preferred
shares in Astra for a total consideration of R$57.9 million, which increased
our total interest in Astra to 65.5% (50% of the voting capital) and gave rise
to goodwill of R$28.9 million. As of June 4, 2002, CBB, a wholly-owned
subsidiary of AmBev, increased its participation in the total capital of Astra
from 73.1% to 93.6%, through the purchase of the Aguia S.A. stake in Astra.
Through 2002, CBB purchased shares from minority shareholders and increased its
participation in the total capital of the company to 96.7%. The 2002 stock
purchase consideration totaled R$128.5 million, including R$94.3 million of
goodwill.

      IBANN

      On November 1, 2001, the shareholders of AmBev and the minority
shareholders of IBANN, a subsidiary of CBB (and a former Antarctica
subsidiary), consummated a share exchange and approved the acquisition of the
remaining interest (35.0%) in IBANN by AmBev. AmBev issued 526,210,199 shares,
of which 96,712,635 were common shares and 429,497,564 were preferred shares in
exchange for 17.1% and 45.4% of the common and preferred shares the minorities
held in IBANN and recorded a capital increase of R$298.3 million. On December
10, 2001, we announced that we would pay R$242.2 million to the minority
shareholders of IBANN who exercised their appraisal rights in lieu of accepting
the share exchange. Under Brazilian GAAP, we accounted for this as a separate
transaction, in effect a share buy-back, and recorded it as a reduction in
treasury shares. Under Brazilian GAAP, no goodwill was recognized on this
transaction, although a capital gain of R$18.2 million was recognized in the
statement of operations to reflect the difference in the net book value of the
assets pertaining to the minority shareholders and the appraised book value
calculated in the previous three months. For the purposes of U.S. GAAP, we
believe that this transaction was inseparable from the acquisition itself and
that the capital paid to IBANN minority shareholders was part of the
consideration for the purchase.

      Bavaria

      On November 6, 2000, we entered into stock and distribution agreements
providing for the sale of Bavaria S.A. to Molson Inc. See "Background on the
Company-Brazilian Antitrust Approval". The total contingent consideration for
the sale was R$416.1 million, of which R$191.4 million was received at that


                                      70


<PAGE>


time. The remaining R$224.7 million would be payable to us by Molson subject to
the Bavaria brand reaching certain market share thresholds. We have not
recorded this as an asset on the balance sheet. Unless otherwise stated, the
historical operating and financial data of AmBev includes the operations of
Bavaria through October 31, 2000.

      Pepsi

      In 1997, we acquired the Pepsi bottlers in southern and southeastern
Brazil and the exclusive rights to produce, sell and distribute PepsiCo soft
drink products in northeastern Brazil. Under Brazilian GAAP, the shareholders'
equity of these bottlers at the date of acquisition was zero, and since we paid
a nominal amount for the business, no goodwill was recognized. Under U.S. GAAP,
however, the acquisition gave rise to R$43.8 million of goodwill as of December
31, 1997 (which was being amortized over a 10-year period). In 1999, we
obtained the exclusive rights to produce, sell and distribute PepsiCo soft
drink products throughout Brazil. See "Information on the Company-Business
Overview-Our Products and Brands-Joint Ventures and Strategic Alliances". We
have made a number of other smaller acquisitions in recent years which are
discussed in note 7 of the financial statements.

SYNERGIES FROM THE COMBINATION OF BRAHMA AND ANTARCTICA

      The combination of Brahma and Antarctica allowed us to realize synergies
beginning in the second quarter of 2000, which have consisted of the following:

         o   Production synergies, obtained by optimizing logistics and
             production facilities such as bottling lines. Since the
             combination was approved by the antitrust authorities in April
             2000, we closed down eight soft drink plants, with the volume
             produced by these plants mostly being reallocated to our other
             plants;

         o   Distribution synergies resulted from the transfer of best
             practices among Brahma, Antarctica and Skol third-party and
             direct distribution networks through our Excellence Program,
             resulting in overall lower distribution costs per hectoliter and
             improved execution at the point of sale;

         o   Administrative cost savings resulted from the combination since
             we closed Antarctica's head office and rationalized redundant
             administrative facilities and personnel. Also, we combined the
             regional (commercial) sales structures of Antarctica and Brahma;

         o   Purchasing synergies were realized by implementing best practices
             in global sourcing and taking advantage of our increased
             bargaining power; and

         o   We used part of Brahma's cash to pay down a substantial portion
             of Antarctica's short-term debt which had higher interest costs.
             Also, our credit profile improved relative to the stand-alone
             companies.

EFFECT OF DIRECT DISTRIBUTION ON RESULTS OF OPERATIONS

      Historically, both Brahma and Antarctica distributed their products
through exclusive third-party distribution networks. See "Information on the
Company-Distribution and Sales". In the second half of 1997, Brahma began to
implement the direct distribution of its products. For the year ended December
31, 2002, direct distribution represented 33.9% of our sales volumes, compared
to 31.1% in 2001.


                                      71


<PAGE>


      As the proportion of our net sales made through direct distribution
rises, our results of operations are affected as follows:

      o     Net sales increases. Net sales made through direct distribution
            are greater than net sales made through third parties. Under
            direct distribution, we receive a higher price for our products
            since third-party distribution fees are not applicable when we
            sell the product ourselves. Freight costs, absorbed by us when we
            sell to third-party distributors are not deducted when sales are
            made under direct distribution. Since these costs are deducted
            from gross sales, the effect of greater direct distribution is an
            increase in net sales.

      o     We incur transportation costs. When we sell our products directly,
            we incur freight costs in transporting our products between our
            plant and the point of sale, which are included in our cost of
            sales under U.S. GAAP and in our selling expenses under Brazilian
            GAAP.

      o     Our selling expenses increase. Under the third-party distribution
            system, the salesperson is an employee of the distributor, while
            under direct distribution, the salesperson is our employee. As
            direct distribution grows, we incur additional selling expenses
            from the hiring of additional employees which are offset by the
            increase in net sales.

      o     Our working capital needs increase. Under our direct distribution
            system, we extend limited credit to some points of sale, based on
            market rates with terms ranging from two to ten days. Accordingly,
            as we increase direct distribution to the points of sale, our
            receivables increase.

FOREIGN CURRENCY EFFECTS

      We have significant amounts of U.S. dollar-denominated liabilities and
operating expenses denominated in or linked to U.S. dollars. However,
substantially all of our revenues are generated in reais.

      The devaluations of the real have had the following effects on our
results of operations:

         o   As of December 31, 2002, approximately 44% of our total costs of
             sales was linked to U.S. dollars. The significant devaluations of
             the real have had an unfavorable effect on the cost of packaging
             such as cans and PET bottles as well as imported raw materials.
             Historically, we have been able to raise prices to partially
             offset the cost increase. However, during periods of rapid
             devaluation or when the rate of devaluation significantly exceeds
             that of inflation, we may not be able to raise prices at a rate
             sufficient to offset our cost increases, or to recover such cost
             increases in future periods.

         o   The translation effects of our U.S. dollar transactions (i.e.,
             cash, cash equivalents, loans and the unrealized gains and losses
             from foreign currency and interest rate swap contracts, among
             others) are recorded as financial income and financial expense in
             our statements of operations.

         o   We have policies designed to manage commodity and currency risks
             to protect our transactions and net assets from the significant
             devaluations. We entered into commodity and cross-currency
             interest rate swap contracts to offset losses generated by our
             U.S. dollar denominated transactions and loans, which were
             effective in mitigating the significant losses which would
             otherwise have been recorded at the time of the significant
             devaluations occurred since 1999. These foreign currency risk
             management policies are


                                      72


<PAGE>


designed to take advantage of tax benefits as the gains mostly accrue in
offshore, tax-exempt entities, whereas the foreign exchange losses are tax
deductible. See "Quantitative and Qualitative Disclosures About Market Risk".

TAXES

      TAXES ON INCOME.

      Income taxes in Brazil comprise federal income tax and social
contribution (which is an additional federal income tax). The composite
statutory rates applicable for the respective periods were 34% in 2002, 34% in
2001 and 34 to 37% in 2000. The range of statutory rates in 2000 were the
result of changes in the social contribution rates applied during those
periods. For 2002, 2001 and 2000, our Brazilian GAAP effective tax rate was a
benefit of 21.5% in 2002, a charge of 5.2% in 2001, and a benefit of 105.5% in
2000.

      The major reasons for the differences between the effective tax rates and
the Brazilian composite statutory rates have been (i) benefits arising from
tax-deductible payments of interest on shareholders' equity whereas the
interest is charged directly to shareholders' equity, (ii) certain non-
deductible expenses, (iii) different foreign tax rates, (iv) valuation
allowances against net operating losses and reversals, (v) non-taxable benefits
arising from State value-added incentive programs, and (vi) re-filings of tax
returns following changes in interpretation of certain deductions.

      Under U.S. GAAP, we recorded a benefit of R$148.0 million  corresponding
to 80% of the original tax loss carryforwards acquired at the time of the Pepsi
transaction in 1997 which through October 2002 had been subject to certain
restrictions.

      TAX LOSSES AVAILABLE FOR OFFSET.

      We had tax loss carryforward assets available for offset of R$1,080.5
million at December 31, 2002. Income tax losses available for offset in Brazil
(90.2% of our gross losses at December 31, 2002) do not expire, however, the
annual offset is limited to 30% of taxes payable.

      In October 2000, we implemented a major restructuring of our operating
companies in Brazil in order to optimize our income tax losses enabling us to
recognize a benefit in income of R$82.5 million from the Brahma group companies
and R$445.2 million from the Antarctica group companies. During 2000, we also
restructured our holdings in certain offshore entities, primarily investment
companies based in Uruguay, as a tax planning measure, which increased net
income by an additional  R$267.6 million.

      New legislation was introduced in the third quarter of 2001 to subject
offshore earnings to income tax in Brazil regardless of whether earnings have
been remitted to Brazil and to restrict tax planning measures that have been
available to companies in Brazil, and that we have made use of in the past.
Although we do not believe that earnings that have been accumulated offshore
will be taxed, our access to effective tax planning measures may be restricted
in the future.

      TAXES ON SALES-RECOGNITION OF BENEFIT.

      A long standing tax dispute was decided in favor of Brazilian taxpayers
on May 29, 2001 at an arbitration session of the Court of Appeals. As a result
of the decision, we reversed part of the provision for Social Integration
Program tax (PIS), a tax on gross revenues, through a credit of R$123.8
million, and which was recorded in provisions for contingencies and liabilities
associated with legal proceedings in the year ended December 31, 2001.


                                      73


<PAGE>


YEAR ENDED DECEMBER 31, 2002 COMPARED WITH YEAR ENDED DECEMBER 31, 2001

      The following table sets forth the consolidated financial highlights of
AmBev for the years ended December 31, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                                CONSOLIDATED FINANCIAL HIGHLIGHTS
                                                                        ----------------------------------------------------
<S>                                                                      <C>                     <C>                    <C>
                                                                         2002                   2001              % CHANGE
                                                                         ----                   ----              --------
                                                                        (R$ in millions, except volume amounts, percentages
                                                                                    and per share amounts)

Sales volume-000 hectoliters(1)...........                                  80,153                80,853              (0.9)
Net sales.................................                                 7,325.3               6,525.6               12.3
Net revenue per hectoliter-R$/hl..........                                    91.4                  80.7               13.2
Cost of sales.............................                               (3,341.7)             (3,366.2)              (0.7)
Gross profit..............................                                 3,983.6               3,159.4               26.1
 GROSS MARGIN (%).........................                                   54.4%                 48.4%
Selling, general and administrative expenses
   Selling and marketing  expenses........                                 (687.2)               (707.8)              (2.9)
   Direct distribution expenses...........                                 (537.4)               (467.8)               14.9
   General and administrative expenses,                                    (373.5)               (351.5)                6.3
   including directors' fees.............
   Depreciation and amortization(2).......                                 (334.6)               (256.5)               30.4
                                                                         --------              --------
                                                                         (1,932.7)             (1,783.6)                8.4
                                                                           2,050.9               1,375.8               49.1
Provisions for contingencies..............                                 (123.7)                (33.9)              264.9
Other operating income, net(4)............                                   199.4                 152.2               31.0
Net financial expenses....................                                 (747.1)               (503.1)               48.5
                                                                          -------               -------
Operating income(4) (5)...................                                 1,379.5                 991.0               39.2
    OPERATING MARGIN (%)..................                                   18.8%                 15.2%
Net income................................                                 1,510.3                 784.6               92.5
    NET MARGIN                                                               20.6%                 12.2%
EARNINGS PER SHARE - R$/000 SHARES(3).....                                   39.48                 20.31               94.4

-----------------
Amounts may not add due to rounding.

(1)   Includes sales volume of beer and soft drinks.

(2)   Does not include depreciation recorded on production assets which is
      recorded within Cost of sales, nor amortization of goodwill within Other
      operating income, net.

(3)   Calculated based on year end number of shares, excluding treasury
      shares.

(4)   Reclassifications were made in the 2001 statement of operations between
      non-operating income (expense), net to other operating income, net.
      There was a change in the criteria that resulted in the reclassification
      of tax recoveries in the amount of R$105.0 million from Non-operating
      income (expense), net to Other operating income, net. Accordingly, the
      Other operating income (expense), net for 2001 of R$152.2 million and
      Operating income (expense) for 2001 of R$991.0 million in the table
      above are different from those disclosed in the annual report.

(5)   Under Brazilian GAAP, operting income includes net financial expense.
</TABLE>

MARGIN ANALYSIS

      The following table sets forth certain items in our statement of
operations expressed as percentages of net sales for the years ended December
31, 2002 and 2001:

<TABLE>
<CAPTION>
<S>                                                            <C>         <C>
                                                              YEAR ENDED DECEMBER 31,
                                                            --------------------------
                                                                 2002       2001
                                                            ------------  ------------
                                                                  (%)        (%)

Net sales.............................................          100.0      100.0


                                      74


<PAGE>


Cost of sales.........................................          (45.6)     (51.6)
Gross profit..........................................           54.4       48.4
Selling and marketing expenses........................           (9.4)     (10.8)
Direct distribution expenses..........................           (7.3)      (7.2)
General and administrative expenses, including directors' fees   (5.1)      (5.4)
Depreciation and amortization.........................           (4.6)      (3.9)
Provision for contingencies...........................           (1.7)      (0.5)
Other operating income, net...........................            2.7        2.3
Net financial expenses................................          (10.2)      (7.7)

Operating income......................................           18.8       15.2

</TABLE>

FINANCIAL HIGHLIGHTS BY BUSINESS SEGMENT

      The following table sets forth certain financial highlights by business
segment for the years ended December 31, 2002 and 2001:

<TABLE>
<CAPTION>
<S>                                              <C>                <C>            <C>            <C>         <C>            <C>
                                                                         YEAR ENDED DECEMBER 31,
                                              -------------------------------------------------------------------------------------
                                                                     2002                                     2001
                                              ----------------------------------------------    -----------------------------------
                                                  BEER          SOFT DRINKS        OTHER          BEER       SOFT DRINKS     OTHER
                                               ---------        -----------        ------       --------     ------------    ------

Net sales...............                         5,942.7          1,096.2           286.3       5,238.9        967.0         319.6
Cost of sales...........                       (2,451.2)           (698.4)         (192.1)     (2,475.7)      (662.7)       (227.8)
                                               ---------          --------         -------     ---------      -------       --------
Gross profit............                         3,491.5            397.8            94.2       2,763.2        304.3          91.8
Selling, general and administrative expenses    (1,598.7)          (284.1)          (50.0)     (1,437.2)      (299.1)        (47.2)
                                               ---------          --------         -------     ---------      -------       --------
                                                 1,892.9            113.7            44.3       1,326.1          5.2          44.5
Amounts may not add due to rounding.
</TABLE>

      NET SALES

      Net sales increased by 12.3% for the year ended December 31, 2002 to
R$7,325.3 million from R$6,525.6 million in the same period in 2001. This
increase was primarily due to growth of the beer and soft drink segments in
Brazil, through improved revenue management and continuous standardization of
best practices within the Skol, Brahma, and Antarctica distribution networks.

      BEER

      Net sales of beer increased by 13.4% for the year ended December 31, 2002
to R$5,942.7 million from R$5,238.9 million in the same period in 2001,
primarily of revenue management initiatives and better execution at the point
of sale in the Brazilian operations. Operations in the Paraguayan market also
contributed to this increase in net sales. Performances in Argentina, Uruguay
and Venezuela were impacted by economic crises, political uncertainties and
social-economic turmoil in those countries.

      BRAZILIAN BEER SALES. Net sales increased by 15.0% for the year ended
December 31, 2002, to R$5,546.4 million from R$4,824.5 million in the same
period in 2001, mainly as a result of revenue management initiatives. Net sales
per hectoliter increased 16.9% to R$95.6 in 2002 from R$81.8 in 2001 while
sales volumes fell 1.7%. During the year, consumer prices for our main brands
remained in line with inflation. Other reasons for the growth in net sales of
Brazilian beer include the increase in the proportion of direct sales, further
initiatives in sales force training to help standardize and improve point of
sale execution, the revitalization of our super premium brand Bohemia and the
launching of high-margin products, such as Skol Beats and Chopp Express, to
address specific niches of the Brazilian market.


                                      75


<PAGE>


      INTERNATIONAL BEER SALES. Net sales outside of Brazil decreased by 4.4%
for the year ended December 31, 2002 to R$396.3 million from R$414.4 million in
the same period of 2001. While sales volume grew 14.3% to 3.9 million
hectoliters and the packaging mix and increase in direct distribution
positively impacted sales, net sales per hectoliter fell as a result of
significant currency depreciation. The proportion of one-way packaging
increased to 29.0% in 2002 from 15.3% in 2001. Direct sales in the cities of
Buenos Aires and Caracas accounted for 40.2% and 82.6% of total sales,
respectively.

      AmBev's international segment volume growth was achieved through market
share gains in Argentina, Paraguay, Uruguay and Venezuela, as a result of the
expansion of direct sales in major cities and the replication of point of sale
execution best practices in those markets. Volume growth was also due to the
start up of Paraguayan operations, which accounted for 0.4 million hectoliters
in 2002, compared to only two months of production in 2001.

      SOFT DRINKS

      Net sales increased by 13.4% for the year ended December 31, 2002, to
R$1,096.2 million from R$967.0 million in the same period in 2001 as a direct
result of our strategy to focus on AmBev's core brands-Guarana Antarctica
and Pepsi-and leverage point of sale execution from our leading beer brands.
AmBev's core brands volume increased by 6.8% and represented 78.2% of total
sales, compared to 72.4% in 2001. Sales volume for the full portfolio decreased
1.1%. Net sales per hectoliter rose 14.6% as a result of our strategy to narrow
the price gap of our products to 5-10% below those of the market leader and the
successful launch in 2002 of Pepsi Twist, which is premium priced and achieved
1.2% market share as of December 31, 2002. Additionally, an increase in one-way
packaging to 92.5% of sales volume in 2002, compared to 90.8% in 2001, as well
as higher levels of direct distribution, also contributed to the overall growth
in net sales per hectoliter.

      COST OF SALES

      Total cost of sales fell by 0.7% for the year ended December 31, 2002 to
R$3,341.7 million from R$3,366.2 million in the same period in 2001. During
most of 2002 our derivative financial instruments fully mitigated the effect
the devaluation of the real had on our U.S. dollar-linked costs such as
aluminum cans, malt and hops, compensating for the 21.6% average devaluation of
the real (34.3% comparing December 31, 2002 to December 31, 2001). Our cost of
sales would have been R$345.7 million higher had we not contracted these
derivative financial instruments. The average exchange rate for the hedging
transactions was R$2.42 per U.S.$1.00, compared to a market average exchange
rate of R$2.99 per U.S.$1.00 in 2002. Total cost of sales, excluding
depreciation, increased to R$3,016.7 million in 2002, which is 0.3% above the
same period in 2001. Variable costs, which mainly include packaging (aluminum
cans and PET bottles), and raw material costs (malt, sugar and hops)
represented 70.4% and 68.9% of the total cost of sales in 2002 and 2001,
respectively.

      As a percentage of our net sales, total cost of sales decreased to 45.6%
in 2002 from 51.6% in 2001.

      The following table sets forth the total cost breakdown, and cost of
sales per hectoliter:

<TABLE>
<CAPTION>
<S>                                  <C>      <C>     <C>   <C>   <C>
                                                           COST BREAKDOWN
                                    ---------------------------------------------------------------------
                                          2002        2001        2002        2001        % CHANGE
                                    ------------  ----------   ----------  -----------  -----------------
                                          (R$ in millions)            R$/hl(1)               (%)

Raw material..................           873.5      800.9         10.9         9.9            10.1
Packaging.....................         1,478.6    1,517.3         18.4        18.8            (2.1)
Labor.........................           240.9      223.8          3.0         2.8             7.1
Depreciation..................           324.9      357.3          4.1         4.4            (6.8)


                                      76


<PAGE>


Other.........................           423.6      466.8  5.3     5.8        (8.6)
TOTAL COST OF SALES...........         3,341.7    3,366.2 41.7    41.6         0.2
Cost of sales excluding depreciation   3,016.7    3,008.8 37.6    37.2         1.1

(1) Includes sales volume of beer and soft drinks only.

Amounts may not add due to rounding.
</TABLE>

      BEER

      BRAZIL BEER

      Despite the impact of the devaluation of the real on U.S. dollar-
denominated commodities, such as aluminum cans and malt, cost of sales for beer
decreased 1.0% for the year to December 31, 2002 to R$2,451.2 million from
R$2,475.7 million in the same period in 2001. This was possible due to the
derivative financial instruments put in place in 2002. In Brazil, cost of sales
of beer decreased by 1.7% for the year ended December 31, 2002 to R$2,237.2
million from R$2,274.7 million in the same period in 2001, and cost of sales
per hectoliter remained stable at R$38.6.

      In addition to the effect of the derivative financial instruments, the
decrease in sales volumes and the shift in the packaging mix toward returnable
containers also contributed to the decrease in costs per hectoliter sold. As a
percentage of sales, cost of sales for beer decreased from 47.3% in 2001 to
41.2% in 2002, as costs were offset by higher net sales per hectoliter and
operating cost savings from our cost cutting program of R$43.2 million.

      INTERNATIONAL BEER

      International beer operations cost of sales increased 6.5% for the year
to December 31, 2002 to R$214.0 million from R$200.9 million in the same period
in 2001, but cost of sales per hectoliter decreased 6.8%, to R$54.4 from
R$58.4, for the same periods.

      SOFT DRINKS

      Cost of sales for the soft drink segment rose 5.4% for the year ended
December 31, 2002 to R$698.4 million from R$662.7 million in the same period in
2001, despite the effect of the derivative financial instruments offsetting the
devaluation of the real. The principal reason for this increase was the shift
in the packaging mix toward non-returnable containers, which represented 92.5%
of sales volumes in 2002, compared to 90.8% in 2001. As a percentage of sales,
cost of sales for soft drinks decreased from 68.5% in 2001 to 63.7% in 2002.

      GROSS PROFIT

      Gross profit increased by 26.1% for the year ended December 31, 2002 to
R$3,983.6 million from R$3,159.4 million for the same period in 2001. Gross
margin increased to 54.4% in 2002 from 48.4% in 2001. This improvement was
principally due to increased net sales per hectoliter caused by revenue
management initiatives and a higher percentage of direct sales.

      SELLING AND MARKETING EXPENSES

      Selling and marketing expenses decreased by 2.9% for the year ended
December 31, 2002 to R$687.2 million from R$707.8 million. While we reduced
fixed expenses, we maintained our continuous investments in brand equity,
including the launching of new beer products and the Guarana Antarctica
sponsorship of the Brazilian national soccer team.


                                      77


<PAGE>


      DIRECT DISTRIBUTION EXPENSES

      Direct distribution expenses include product delivery charges and the
cost of sales and delivery personnel required to distribute our products.
Direct distribution expenses increased by 14.9% for the year ended December 31,
2002 to R$537.4 million from R$467.8 million in the same period in 2001. This
growth was mainly due to higher direct sales, which accounted for 33.9% of
total sales volume in 2002, compared to 31.1% during 2001. Although the
increase in direct distribution results in higher net sales since we sell
directly to the retailer, we also assume the cost of the sales force as well as
the necessary transportation and storage expenses. As a percentage of net
sales, direct distribution expenses remained stable at 7.3% for the year ended
December 31, 2002.

      GENERAL AND ADMINISTRATIVE EXPENSES

      General and administrative expenses increased 6.3% for the year ended
December 31, 2002 to R$373.5 million from R$351.5 million due principally to
initiatives in optimization of processes and a corporate restructuring,
including the benefits realized through the creation of the Shared Services
Center (SSC), located at the Jaguariuna plant in Sao Paulo. By
rationalizing administrative operating activities, we expect to recognize the
benefit of further process efficiencies and fixed cost reduction in the short
term, and faster implementation of new technologies in the medium term.

      DEPRECIATION AND AMORTIZATION

      Depreciation and amortization increased 30.4% for the year ended December
31, 2002 to R$334.6 million from R$256.5 million in the same period in 2001.
This increase reflects both the investment in our sub-zero coolers, which are
placed at strategically located points of sale, and the investments in direct
distribution. During the next two to three years the company will be
significantly increasing investment as part of our strategy to enhance our
point of sale execution and to leverage our distribution efficiency. Thus,
depreciation should grow proportionally.

      PROVISIONS FOR CONTINGENCIES

      Net provisions for contingencies charged to the statement of operations
amounted to R$123.7 million for the year ended December 31, 2002, compared to
R$33.9 million charged in the same period in 2001.

      The principal component of the provisions in 2002 includes R$120.9
million for legal exposures related to a modification of the PIS/COFINS tax
base in Brazil which should remain provisioned until final ruling. Further
legal issues arising in 2002 resulting in exposures include R$30.1 million for
labor and other legal issues, as well as R$6.5 million attributable to the
principal and fines for a pending IPI and ICMS sales taxes payment issue.

      These charges were partially offset by the reversal of ICMS provisions
from previous periods of R$8.1 million, the reversal of R$6.0 million
associated with legal issues with third-party distributors and R$19.7 million
for other items, all of which had been accrued in previous periods.

      OTHER OPERATING INCOME, NET

      Other operating income, net increased by 31.0% for the year ended
December 31, 2002 to R$199.4 million from R$152.2 million in the same period in
2001. The principal components of other operating income in 2002 were foreign
exchange gains in our subsidiaries abroad (principally malting plants in
Argentina and Uruguay whose functional currency is the U.S. dollar), which
totaled R$128.8 million, a R$151.9 million gain on financed sales taxes which
were forgiven by the government (tax


                                      78


<PAGE>


incentives), and a R$26.6 million gain
associated with sales tax issues (PIS, COFINS, ICMS and IPI). All other items
accounted for R$14.8 million.

      These amounts were partially offset by goodwill amortization (Antarctica,
Cympay and Salus) of R$105.3 million and provisions for losses on obsolete
bottles and crates, which amounted to R$17.4 million for the period ended
December 31, 2002.

      NET FINANCIAL EXPENSES

      Our financial income consists not only of interest income, but also of
foreign exchange fluctuations and gains on derivatives, including foreign
currency swaps and forward contracts. Our financial expenses consist of
interest charges on debt, but also include Brazilian financial transaction
taxes and bank charges, interest on contingencies, and foreign exchange
fluctuations, principally on debt, and losses on derivatives, including cross
currency interest rate swaps and forward contracts.

      Financial income increased 606.0% for the year ended December 31, 2002 to
R$2,530.3 million from R$358.4 million in 2001. Financial expenses increased by
280.4% for the year ended December 31, 2002 to R$3,277.3 million from R$861.5
million in the same period in 2001. Net financial expenses, therefore, for the
year ended December 31, 2002 were 48.5% above the prior year period at R$747.1
million from R$503.1 million in the same period in 2001.

      OPERATING INCOME

      Operating income increased by 39.2% for the year ended December 31, 2002
to R$1,379.5 million from R$991.0 million in the same period in 2001.

      This increase was primarily the result of a 26.1% growth in gross profit
as a result of the revenue management initiatives on the key beer brands, as
well as our financial instruments strategy which mitigated the impact of higher
U.S. dollar-denominated costs in local currency due to the devaluation of the
real in 2002.

      Additionally, total operating expenses increased by only 8.4% for the
year to December 31, 2002 to R$1,932.7 million from R$1,783.6 million in the
same period in 2001 despite inflation of 12.5% in 2002 (IPCA index). This was
mainly due to saving initiatives in the second half of 2002, which led to cash
savings from reduced operating expenses, excluding direct distribution, of
R$93.6 million, compared to the second half of 2001.

      NON-OPERATING INCOME (EXPENSE), NET

      Non-operating income (expense) amounted to an expense of R$72.1 million
for the year ended December 31, 2002, compared to income of R$2.3 million for
the same period in 2001. The principal items within non-operating income
(expense) in 2002 were a R$41.6 million impairment charge for losses on assets
held for sale and a R$30.5 million provisioned for all other items.

      INCOME TAX BENEFIT (EXPENSE)

      Taxes on income amounted to a benefit of R$280.6 million for the year
ended December 31, 2002, compared to a tax charge of R$51.9 million in the same
period in 2001. At statutory income tax rates, the charge for income tax and
social contribution would have amounted to R$444.5 million in 2002. Non-taxable
gains generated in subsidiaries abroad, that arose principally due to foreign
exchange gains on cash in U.S. dollars, amounted to a benefit of R$735.2
million in 2002, compared to R$151.5 million in 2001. All other items accounted
for a charge of R$10.1 million in 2002.


                                      79


<PAGE>


      PROFIT SHARING AND CONTRIBUTIONS

      Provision for employee and management profit sharing grew by 38.1% for
the year ended December 31, 2002 to R$112.3 million from R$81.3 million in the
prior year. This amount relates to performance based bonuses, which are
calculated based on the achievement of corporate, department or business unit,
and individual goals, established by the Board of Directors, including, among
others, certain Economic Value Added ("EVA") targets which were met in 2002.
According to AmBev's by-laws, the profit sharing payments are limited to 10% of
net income for employees and 5% for executives. During 2002, AmBev contributed
R$12.8 million to the FAHZ, to ensure that the Foundation's future actuarial
obligations were fully funded and expensed this amount directly to income.

      MINORITY INTEREST

      Minority shareholders in our subsidiaries shared in losses of R$47.3
million for the year ended December 31, 2002, compared to losses of R$0.3
million in 2001. Higher losses were due principally to the economic crisis
which negatively affected the net income of our international beer operations.

      NET INCOME

      Net income grew 92.5% for the year ended December 31, 2002 to R$1,510.3
million from R$784.6 million in the same period in 2001.

YEAR ENDED DECEMBER 31, 2001 COMPARED WITH YEAR ENDED DECEMBER 31, 2000

      The following table sets forth the consolidated financial highlights of
AmBev for the years ended December 31, 2001 and 2000:

<TABLE>
<CAPTION>
<S>                                                             <C>                    <C>                    <C>
                                                                               CONSOLIDATED FINANCIAL HIGHLIGHTS
                                                               -------------------------------------------------------------------
                                                                      2001(4)               2000(4)             % CHANGE
                                                               ---------------------    -----------------    ---------------------
                                                                        (R$ in millions, except volume amounts, percentages
                                                                                       and per share amounts)

Sales volume-000 hectoliters..............                                80,853              81,988(3)               (1.4)
Net sales.................................                               6,525.6               5,250.4                24.3
Net revenue per hectoliter-R$/hl..........                                  80.7                  64.0                26.1
Cost of sales.............................                              (3,366.2)             (2,843.7)               18.4
Gross profit..............................                               3,159.4               2,406.7                31.3
 GROSS MARGIN (%).........................                                 48.4%                 45.8%
Selling, general and administrative expenses
   Selling and marketing  expenses........                                (707.8)               (578.6)               22.4
   Direct distribution expenses...........                                (467.8)               (337.0)               38.8
   General and administrative expenses,  including directors'             (351.5)               (373.0)               (5.8)
   fees......................................
   Depreciation and amortization (1)......                                (256.5)               (202.3)               26.8
                                                                        --------              --------
                                                                        (1,783.6)             (1,490.9)               19.6
                                                                         1,375.8                 915.8                50.2
</TABLE>


                                      80


<PAGE>

<TABLE>
<CAPTION>
<S>                                                             <C>                    <C>                    <C>
                                                                               CONSOLIDATED FINANCIAL HIGHLIGHTS
                                                               -------------------------------------------------------------------
                                                                      2001(4)               2000(4)             % CHANGE
                                                               ---------------------    -----------------    ---------------------
                                                                        (R$ in millions, except volume amounts, percentages
                                                                                       and per share amounts)

Provisions for contingencies..............                                 (33.9)                (269.2)             (87.4)
Other operating income, net(4) ...........                                 152.2                    9.1            1,572.5
Net financial expenses....................                                (503.1)                (324.0)              55.3
                                                                          ------                 ------
Operating income(4) (5)...................                                 991.0                  331.7              198.8
    OPERATING MARGIN (%)..................                                  15.2%                   6.3%
Net income................................                                 784.6                  470.2               66.9
    NET MARGIN (%)........................                                  12.0%                   9.0%
EARNINGS PER SHARE - R$/000 SHARES(2).....                                 20.31                  12.19               66.6
</TABLE>
---------------
Amounts may not add due to rounding.

(1)  Does not include depreciation recorded on production assets which is
     recorded within cost of sales, nor amortization of goodwill within other
     operating income, net.

(2)   Calculated based on year end numbers of shares, excluding treasury shares.

(3)   Volumes include Bavaria (79,308 thousand hectoliters excluding Bavaria).

(4)  The 2001 income statement represented in the table above is disclosed
     after the reclassifications between Non-operating income (expense), net
     and Other operating income, net and therefore does not correspond to that
     disclosed in the 2001 annual report.

(5)  Under Brazilian GAAP, operating income includes net financial expense.

MARGIN ANALYSIS

      The following table sets forth certain items in our statement of
operations expressed as percentages of net sales for the years ended December
31, 2001 and 2000:

<TABLE>
<CAPTION>
<S>                                                            <C>         <C>
                                                                         YEAR ENDED DECEMBER 31,
                                                                      ------------------------------
                                                                            2001              2000
                                                                      ---------------    ------------
                                                                             (%)               (%)

Net sales.............................................                      100.0            100.0
Cost of sales.........................................                      (51.6)           (54.2)
Gross profit..........................................                       48.4             45.8
Selling and marketing expenses........................                      (10.8)           (11.0)
Direct distribution expenses..........................                       (7.2)            (6.4)
General and administrative expenses, including directors' fees               (5.4)            (7.1)
Depreciation and amortization of deferred charges.....                       (3.9)            (3.9)
Provision for contingencies...........................                       (0.5)            (5.1)
Other operating income, net...........................                        2.3              0.2
Net financial income (expenses).......................                       (7.7)            (6.2)

Operating income......................................                       15.2              6.3

</TABLE>
FINANCIAL HIGHLIGHTS BY BUSINESS SEGMENT

      The following table sets forth certain financial highlights by business
segment for the years ended December 31, 2001 and 2000:


                                      81


<PAGE>


<TABLE>
<CAPTION>
<S>                                              <C>                <C>            <C>            <C>         <C>            <C>
                                                                         YEAR ENDED DECEMBER 31,
                                              -------------------------------------------------------------------------------------
                                                                     2001                                     2000
                                              ----------------------------------------------    -----------------------------------
                                                  BEER          SOFT DRINKS        OTHER          BEER       SOFT DRINKS     OTHER
                                               ---------        -----------        ------       --------     ------------    ------

Net sales...............                         5,238.9              967.0         319.6       4,288.1            848.8      113.5
Cost of sales...........                        (2,475.7)            (662.7)       (227.8)     (2,184.0)          (552.4)    (107.3)
                                                --------             ------        ------      --------           ------     ------
Gross profit............                         2,763.2              304.3          91.8       2,104.1            296.4        6.2
Selling, general and administrative expenses    (1,437.2)            (299.1)        (47.2)     (1,226.1)          (236.4)     (28.2)
                                                --------             ------        ------      --------           ------     ------
                                                 1,326.0                5.2          44.6         878.0             60.0      (22.0)
----------------
Amounts may not add due to rounding.
</TABLE>

      NET SALES.

      Net sales increased by 24.3% for the year ended December 31, 2001 to
R$6,525.6 million from R$5,250.3 million in the same period in 2000. This
increase was primarily as a result of the growth of the beer and soft drink
segments in Brazil, through standardization of best practices within the Skol,
Brahma, and Antarctica distribution networks, in addition to improved revenue
management. A shift in the packaging mix and a higher percentage of direct
distribution had a positive influence on net sales per hectoliter in 2001.

      BEER

      Net sales of beer increased by 22.2% for the year ended December 31, 2001
to R$5,238.9 million from R$4,288.1 million in the same period in 2000,
primarily as a result of revenue management initiatives and better execution at
the point of sale in the Brazilian operations. Strong performances in
Argentina and Venezuela, as well as the introduction of operations in the
Paraguayan and Uruguayan markets, also contributed to this increase in net
sales.

      BRAZILIAN BEER SALES. Net sales increased by 19.3% for the year ended
December 31, 2001, to R$4,824.5 million from R$4,044.2 million in the same
period in 2000, mainly as a result of revenue management initiatives. During
the year, consumer prices for our three main brands, Skol, Brahma and
Antarctica increased 15.7%, 14.7% and 18.6%, respectively. Other reasons for
the growth in net sales of Brazilian beer include the increase in the
proportion of direct sales, further initiatives in sales force training to help
standardize and improve point of sale procedures, and a shift in mix toward
non-returnable packaging which increased net sales per hectoliter.

      INTERNATIONAL BEER SALES. Net sales outside of Brazil increased by 69.9%
for the year ended December 31, 2001 to R$414.4 million from R$243.9 million in
the same period of 2000. Sales volume increased 16.4% to 3.3 million
hectoliters in the international markets in 2001. This growth was achieved
through market share gains in Argentina and Venezuela, which at December 31,
2001 attained 16% and 10%, respectively, as a result of the introduction of
direct distribution centers in major cities. These distribution centers were
essential in assuring a better point of sale execution in both markets. Volume
growth was also achieved through new product launches, particularly the
successful introduction of Brahma Light into the  Venezuelan market. Further
growth in net sales was also achieved through the additional volume sales in
new international markets, Paraguay and Uruguay, where operations commenced in
October 2000 and February 2001, respectively.


                                      82


<PAGE>


      SOFT DRINKS

      Net sales increased by 13.9% for the year ended December 31, 2001, to
R$967.0 million from R$848.8 million in the same period in 2000 as a direct
result of our strategy to focus on AmBev's core brands-Guarana Antarctica,
Pepsi and Sukita-and leverage point of sale execution from the high volume beer
brands. Sales volume for all soft drinks increased by 7.4%, while our core
brands volume increased by 17.0%. Net sales per hectoliter were also affected
by an increase in one-way packaging to 90.8% of sales volume in 2001, compared
to 86.7% in 2000, as well as higher levels of direct distribution, contributing
to the overall growth in net sales.

      COST OF SALES.

      Total cost of sales increased by 18.4% for the year ended December 31,
2001 to R$3,366.2 million from R$2,843.7 million in the same period in 2000. In
2001, increases in packaging and raw material costs contributed most to the
increase in cost of sales. These increases were primarily the effect of the
15.7% devaluation of the real in 2001, as 44% of our costs were U.S. dollar-
denominated in 2001. Total cost of sales, excluding depreciation, increased to
R$3,008.8 million in 2001, which is 22.5% above the same period in 2000.
Packaging costs per hectoliter, which mainly includes costs associated with
aluminum cans and PET bottles, and raw material costs per hectoliter,
principally malt, sugar and hops, together represented 68.9% and 70.2% of the
total cost of sales in 2001 and 2000, respectively.

      The negative impact of the devaluation of the local currency on cost of
sales was partially offset by synergies from the integration of the operations
of Antarctica and Brahma, which resulted in productivity and efficiency
improvements, and the shutdown of five of our soft drink plants that lowered
fixed costs. As a percentage of our net sales, cost of sales decreased to 51.6%
in 2001 from 54.2% in 2000.

      The following table sets forth the total cost breakdown, and cost of
sales per hectoliter:

<TABLE>
<CAPTION>
                                              COST BREAKDOWN
<S>                                           <C>        <C>          <C>       <C>          <C>
                                             2001        2000         2001       2000        % CHANGE
                                          --------   ----------   ----------   --------    ------------
                                             (R$ in millions)             R$/hl(1)               (%)

Raw material..................              800.9        736.8         9.9        9.0            10.0
Packaging.....................            1,517.3      1,258.8        18.8       15.4            22.1
Labor.........................              223.8        191.6         2.8        2.3            21.7
Depreciation..................              357.4        386.9         4.4        4.7            (6.4)
Other.........................              466.8        269.6         5.8        3.3            75.8
TOTAL COST OF SALES...........            3,366.2      2,843.7        41.6       34.8            19.5
Cost of sales excluding depreciation      3,008.8      2,456.9        37.6       30.1            24.9
</TABLE>

--------------
(1) Includes sales volume of beer and soft drinks only.

      BEER

      The devaluation of the real was the main reason for the increased costs,
as it increased the price of U.S. dollar-denominated commodities, such as cans
and malt. Cost of sales for beer increased 13.4% for the year to December 31,
2001 to R$2,475.7 million from R$2,184.0 million in the same period in 2000. In
Brazil, cost of sales of beer increased by 10.4% for the year ended December
31, 2001 to R$2,274.8 million from R$2,061.1 million in the same period in
2000, and in cost of sales per hectoliter of 15.9%, to R$38.6 from R$33.3, for
the same periods. International operations cost of sales increased 63.3% for
the year to December 31, 2001 to R$200.9 million from R$123.0 million in the
same period in 2000, and in cost of sales per hectoliter of 40.1%, to R$60.1
from R$42.9, for the same periods. In addition to the effect of the
devaluation, the increases in sales volumes and the shift in the packaging mix
toward non-returnable


                                      83


<PAGE>


containers contributed to the increase in costs per hectoliter sold. However,
as a percentage of sales, cost of sales for beer decreased from 50.6% in 2000
to 47.3% in 2001, as the increased costs were off set by additional margin
generated through synergies and fixed cost savings, obtained particularly
through the strategies initiated after the combination of Brahma and
Antarctica.

      SOFT DRINK

      Cost of sales for the soft drink segment increased by 19.9% for the year
ended December 31, 2001 to R$662.7 million from R$552.4 million in the same
period in 2000. The principal reason for this increase was the devaluation of
the real, which effectively increased the price of U.S. dollar-denominated
commodities.

      GROSS PROFIT.

      Gross profit increased by 31.3% for the year ended December 31, 2001 to
R$3,159.4 million from R$2,406.6 million for the same period in 2000. Gross
margins rose to 48.4% in 2001 from 45.8% in 2000. Gross profit grew principally
due to improved net sales per hectoliter caused by improved revenue management
on the key beer brands as well as the realization of synergies and fixed cost
savings from the integration of Brahma and Antarctica. These benefits were
partially offset by the negative impact of the devaluation of the real on U.S.
dollar-denominated costs.

      SELLING AND MARKETING EXPENSES.

      Selling and marketing expenses increased by 22.4% for the year ended
December 31, 2001 to R$707.8 million from R$578.5 million in 2000, as a result
of additional investments in brand equity, including the Guarana Antarctica
sponsorship of the Brazilian national soccer team and the Pokemon and
Friends of Nature campaigns. As a percentage of net sales, selling and
marketing expenses decreased to 10.8% for the year ended December 31, 2001 from
11.0% in the same period in 2000.

      DIRECT DISTRIBUTION EXPENSES.

      Direct distribution expenses include product delivery charges and the
cost of sales and delivery personnel required to distribute our products.
Direct distribution expenses increased by 38.8% for the year ended December 31,
2001 to R$467.8 million from R$337.0 million in the same period in 2000. This
growth was mainly due to higher direct sales, which accounted for 28.9% of
total sales volume in 2001, compared to 21.6% during 2000. Although the
increase in direct distribution results in higher net sales since we sell
directly to the retailer, it also results in more extensive transportation and
storage expenses. As a percentage of net sales, direct distribution expenses
increased for the year ended December 31, 2001 to 7.1% from 6.4% for the same
period in 2000.

      GENERAL AND ADMINISTRATIVE EXPENSES.

      General and administrative expenses, including directors' fees, declined
5.8% for the year ended December 31, 2001 to R$351.5 million (R$330.0 million
excluding directors' fees) from R$373.0 million in 2000(R$364.0 million
excluding directors' fees) due principally to initiatives in processes
optimization, such as SAP implementation, completed in 2001, and a corporate
restructuring, with the creation of a Shared Services Center (SSC), located at
the Jaguariuna plant in Sao Paulo. By rationalizing administrative
operating activities, we expect to recognize the benefit of further process
efficiencies in the short term, and faster implementation of new technologies
in the medium term. Director's fees increased for the year ended December 31,
2001 to R$21.5 million from R$9.0 million in the same period in 2000.


                                      84


<PAGE>


      DEPRECIATION AND AMORTIZATION.

      Depreciation and amortization increased by 26.8% for the year ended
December 31, 2001 to R$256.5 million from R$202.3 million in the same period in
2000. This increase reflects both the intensification of our sub-zero coolers
placement at strategically located and competitively significant points of sale
and the expansion of our direct distribution network.

      PROVISIONS FOR CONTINGENCIES.

      Net provisions for contingencies charged to the statement of operations
amounted to R$33.9 million for the year ended December 31, 2001. This
represents a decrease of 87.4% from the R$269.2 million charged in the same
period in 2000.

      The principal components of the provision in 2001 include R$37.9 million
for losses on obsolete bottles and crates and R$37.4 million against legal
exposures relating to a modification of the PIS/COFINS tax base in Brazil.
Further legal issues arising in 2001 resulting in exposures include
R$23.8 million attributable to the principal and fines for a pending tax issue
relating to the payment of IPI and ICMS taxes, as well as R$17.1 million
relating to labor and other legal issues. Included also within provisions in
2001 is R$16.1 million for losses of the sale of the assets from Belem and
Simoes Filho plants. All provisions for other items accounted for R$25.4
million.

      These charges were offset by the reversal of R$123.8 million of revenue
tax (PIS) provisions in the year ended December 31, 2001, all of which had been
accrued in previous periods.

      OTHER OPERATING INCOME, NET.

      Other operating income, net increased by 1,572.5% for the year ended
December 31, 2001 to R$152.2 million from R$9.1 million in the same period in
2000. This increase is mainly composed of foreign exchange gains in our
subsidiaries abroad, which totaled R$35.0 million for the period ended December
31, 2001, compared to R$12.6 million for the same period in 2000. Furthermore,
R$105.0 million of tax recovered in 2001 were reclassified from Non-operating
income (expense), as presented in the annual report.

      NET FINANCIAL EXPENSES.

      Our financial income consists not only of interest income, but also of
foreign exchange gains and losses on derivatives, including foreign currency
swaps and forward contracts. Our financial expenses consist of interest charges
on debt, but also include Brazilian financial transaction taxes and bank
charges, interest on contingencies, and foreign exchange losses, principally on
debt, and losses on derivatives, including cross currency interest rate swaps
and forward contracts.

      Financial income decreased by 4.2% for the year ended December 31, 2001
to R$358.4 million from R$374.0 million in the same period in 2000. Financial
expenses increased by 23.4% for the year ended December 31, 2001 to R$861.5
million from R$698.0 million in the same period in 2000. Net financial
expenses, therefore, increased by 55.3% for the year ended December 31, 2001 to
R$503.1 million from  R$324.0 million in the same period in 2000. This was
principally due to an increase in net debt at the year ended December 31, 2001
of R$865.7 million to R$2,030.3 million from R$1,164.6 million recorded at
December 31, 2000. The cost of servicing this debt has therefore increased,
resulting directly in the 23.4% increase in financial expenses. The increase in
net debt was principally associated with the issues of the Japanese Yen 39,060
million syndicated loan and the U.S.$500.0 million 10-year Senior Loan Notes
during 2001. These funds were used in part for capital expenditures during 2001
of R$529.4 million, the acquisition of minority interests in IBANN of R$242.2
million and dividends and interest attributable to shareholders' equity of
R$313.4 million.


                                      85


<PAGE>



      OPERATING INCOME.

      Operating income increased by 198.8% for the year ended December 31, 2001
to R$991.0 million from R$331.7 million in the same period in 2000.

      This increase was primarily the result of a 31.3% increase in gross
profit as a result of the pricing initiatives on the key beer brands, as well
as the realization of synergies from the combination of Brahma and Antarctica,
which partially offset the impact of higher U.S. dollar-denominated costs in
local currency due to the devaluation of the real.

      Total operating expenses, however, only increased by 9.3% for the year to
December 31, 2001 to R$2,168.4 million from R$2,075.0 million in the same
period in 2000. This was as a result of administrative cost saving initiatives
in 2001 as well as the provision recorded in 2000 in operating expenses against
legal exposures of R$269.2 million, significantly reducing operating profit in
that year.

      NON-OPERATING INCOME (EXPENSE), NET.

      Non-operating income (expense) decreased by 95.6% for the year ended
December 31, 2001 to income of R$2.3 million from R$52.7 million in the same
period in 2000. The principal reason for this was the reclassification of tax
credits recognized in 2001 to other operating income (expense). These are
related to IPI tax credits in Polar, income tax credits in Brahma and
Antarctica, as well as revenue taxes (PIS).

      INCOME TAX BENEFIT (EXPENSE).

      Taxes on income amounted to a charge of R$51.9 million for the year ended
December 31, 2001, compared to a tax benefit of R$405.4 million in the same
period in 2000. At statutory income tax rates, the provision for income tax and
social contribution would have amounted to R$284.3 million in 2001. Tax
deductions due to the payment of interest on own capital generated tax savings
of R$96.7 million, while non-taxable gains generated in subsidiaries abroad
resulted in a benefit of R$151.5 million in 2001, compared to R$267.6 million
in 2000. In 2000, we benefited from some tax restructuring initiatives,
particularly the creation of CBB. This allowed us to recognize deferred tax
assets of R$162.7 million. Other items accounted for an expense of R$15.9
million in 2001.

      PROFIT SHARING AND CONTRIBUTIONS.

      Provisions for employee and management profit sharing increased by 51.3%
for the year ended December 31, 2001 to R$81.3 million from R$53.7 million in
the same period in 2000. This amount relates to performance based bonuses which
are calculated based on the achievement of corporate, department or business
unit, and individual goals, established by the Board of Directors, including,
among others, certain Economic Value Added ("EVA") targets. According to
AmBev's by-laws, the profit sharing payments cannot exceed 10% of net income
for employees and 5% for executives. During 2001, AmBev contributed R$75.8
million to the FAHZ, to ensure that the Foundation's future actuarial
obligations were fully funded and expensed this amount directly to income.

      MINORITY INTEREST.

      Minority shareholders in our subsidiaries shared in losses of R$0.3
million for the year ended December 31, 2001, compared to earnings of R$265.9
million in 2000.


                                      86


<PAGE>


      NET INCOME.

      Net income increased by 66.9% for the year ended December 31, 2001 to
R$784.6 million from R$470.2 million in the same period in 2000.

LIQUIDITY AND CAPITAL RESOURCES

      Our primary sources of liquidity have historically been cash flows from
operating activities and borrowings. Our material cash requirements have
included the following:

         o   the servicing of our indebtedness;

         o   capital expenditures;

         o   our share buyback program;

         o   payments of dividends and interest attributable to shareholders'
             equity;

         o   increases in ownership of our subsidiaries or companies in which
             we have equity investments; and

         o   investments in companies participating in the brewing, soft drink
             and malting industries.

      Our cash and cash equivalents and short-term investments at December 31,
2002, 2001 and 2000 were R$3,504.9 million, R$2,562.9 million and R$1,028.3
million, respectively. The increase in the amount of our cash and cash
equivalents at the end of 2002 compared to the end of 2001 was principally due
to operating cash flows. The increase in 2001 from 2000 reflects the proceeds
from the Japanese Yen syndicated loan and the U.S. dollar senior loan notes
issued in that year.

      We believe that cash flows from operating activities, available cash and
cash equivalents and short-term investments, along with access to borrowing
facilities, will be sufficient to fund our capital expenditures, debt service
and dividend payments going forward.

      Due to changes in the classification of certain statement of operations
items and cash equivalents, certain of the 2001 cash flow balances have  been
reclassified in relation to our 2001 annual report. The reclassification relate
to unrealized gains on financial instruments previously classified in other
accounts receivable now in cash and cash equivalents in the amount of R$64.4
million, as in 2002 these assets were considered to be realizable within 90
days or less. Other reclassifications were made within statement of cash flow
categories, described below in "-Cash Flows".

CASH FLOWS

      OPERATING ACTIVITIES

      Our cash flows from operating activities totaled R$2,743.1 million for
the year ended at December 31, 2002 and R$1,332.5 million for the year ended at
December 31, 2001. Our cash generated in 2002 increased by 105.9% when compared
to 2001, as a consequence, primarily, of a 92.5% net income growth in 2002, the
latter being driven primarily by revenue management initiatives and the use of
commodity financial instruments which mitigate our exposure to dollar-
denominated costs.


                                      87


<PAGE>


      Our cash flows from operating activities increased by 7.2% to R$1,332.5
million for the year ended December 31, 2001, from R$1,243.2 million in the
same period in 2000. This increase is a reflection of the growth in net income.

      INVESTING ACTIVITIES

      Cash flows used in our investing activities were R$545.1 million for the
year ended December 31, 2002 and R$949.6 million for the year ended December
31, 2001. The lower cash utilized in investing activities in 2002 compared to
2001 reflects the investment in Cympay, Polar, Pilcomayo and IBANN in 2001,
partially offset by the higher net investment in Astra in 2002 and the receipt
of proceeds of R$98.3 million from the disposal of assets principally from the
Antarctica subsidiaries. In 2001, the disposal of assets generated R$42.2
million.

      Cash flows used in investing activities were R$949.6 million for the year
ended December 31, 2001 and R$100.7 million for the same period in 2000. This
higher utilization in 2001 reflects the cash investments made in the equity of
Cympay, Polar, IBANN and Astra.

      FINANCING ACTIVITIES

      Cash flows used in financing activities were R$2,912.2 million for the
year ended December 31, 2002, compared to proceeds of R$1,418.0 million in
2001. The proceeds of loans, plus cash generation, were used to repay R$2,925.3
million of debt in 2002, including a significant amount of short-term foreign
currency-denominated trade finance debt. Repayments in 2001 amounted to
R$1,343.9 million.

      Cash flows from financing activities were R$1,418.0 million for the year
ended December 31, 2001, compared to cash flows used in 2000 of R$2,065.7
million. The proceeds generated in 2001 reflect the issuance of the Japanese
Yen 39,060 million syndicated loan and the U.S.$500 million 10 year senior loan
note in that year.

      As of December 31, 2002, our outstanding debt totaled R$4,486.7 million
(of which R$607.4 million was short-term debt, including R$292.5 million of the
current portion of long-term debt). Our debt consisted of R$988.0 million of
real-denominated debt and R$3,498.7 million of foreign currency-denominated
debt. The weighted average annual interest rate for the short and long-term
portions of


                                      88


<PAGE>


the local currency-denominated debt was 11.6% and 8.1%, and the average
duration was 6 months and 2.5 years, respectively. The weighted average annual
interest rate for the short- and long-term portions of the foreign
currency-denominated debt was approximately 9.9% and 9.7%, and the average
duration was 5 months and 4.8 years, respectively.

      As of December 31, 2001, our outstanding debt totaled R$4,569.4 million
(of which R$1,720.0 million was short term debt, including R$280.3 million of
the current portion of long term debt). Our debt consisted of R$1,042.0 million
of real-denominated debt and R$3,527.4 million of foreign currency-denominated
debt. The weighted average annual interest rate for the short and long-term
portions of the local currency-denominated debt was 11.0% and 9.0%, and the
average maturity was 6 months and 2.6 years, respectively. The weighted average
annual interest rate for the short and long-term portions of the foreign
currency-denominated debt was approximately 5.6% and 10.3%, and the average
maturity was 7 months and 6.5 years, respectively.

      As of December 31, 2000, our outstanding debt totaled R$2,192.9 million
(of which R$1,265.3 million was short term debt, including R$381.6 million of
the current portion of long term debt). Our debt consisted of R$1,018.6 million
of real-denominated debt and R$1,174.3 million of U.S. dollar-denominated debt.
The weighted average annual interest rate for the short and long-term portions
of the local currency-denominated debt was 12.9% and 10.2%, and the average
maturity was 5 months and 2.5 years, respectively. Foreign currency-denominated
debt of R$1,174.3 million represented 53.6% of total debt at December 31, 2000.
The weighted average annual interest rate for the short and long-term portions
of the foreign currency-denominated debt was 8.2% and 9.1%, and the average
maturity was 7 months and 2.9 years, respectively.

      The following tables set forth our net debt consolidated position as of
December 31, 2002, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                             NET DEBT CONSOLIDATED POSITION
                                                         --------------------------------------------------------------------
<S>                                                      <C>         <C>         <C>           <C>        <C>        <C>
                                                                        2002                                2001
                                                         -------------------------------  -----------------------------------
                                                           LC(1)      FC(2)       TOTAL      LC(1)     FC(2)       TOTAL
                                                         --------  ----------  ---------  ---------  ---------    -----------
                                                                                    (R$  in millions)
Short-term debt(3).........................               269.1      338.3        607.4     271.0    1,449.0      1,720.0
Long-term debt.............................               718.9    3,160.3      3,879.3     771.0    2,078.4      2,849.4
TOTAL......................................               988.0    3,498.7      4,486.7   1,042.0    3,527.4      4,569.4

Cash and cash equivalents and
   short-term investments..................                                     3,504.9                           2,562.9(4)
                                                                                -------                           -------
Net debt...................................                                       981.8                           2,006.4
--------------------------
Amounts may not add due to rounding.
(1)  LC = Local Currency
(2)  FC = Foreign Currency
(3)  Includes the current portion of long-term debt.
(4)  In 2002, we reclassified certain cash and cash equivalents in the statement of cash flow. See-"Liquidity and Capital
     Resources".


                                                                             NET DEBT CONSOLIDATED POSITION
                                                         --------------------------------------------------------------------
                                                                        2002                                2001
                                                         -------------------------------  -----------------------------------
                                                           LC(1)      FC(2)       TOTAL      LC(1)     FC(2)       TOTAL
                                                         --------  ----------  ---------  ---------  ---------    -----------
                                                                                    (R$  in millions)
Short-term debt(3).........................                271.0    1,449.0      1,720.0     316.8     948.5      1,265.3
Long-term debt.............................                771.0    2,078.4      2,849.4     701.8     225.8        927.6
TOTAL......................................              1,042.0    3,527.4      4,569.4   1,018.6   1,174.3      2,192.9

Cash and cash equivalents and
  short-term investments...................                                      2,562.9(4)                       1,028.3
Net debt...................................                                      2,006.4                          1,164.6
-------------------------
Amounts may not add due to rounding.
(1)  LC = Local Currency
(2)  FC = Foreign Currency
(3)  Includes the current portion of long-term debt.
(4)  See footnote (4) to the table above.
</TABLE>


      SHORT-TERM DEBT

      As of December 31, 2002 our short-term debt totaled R$607.4 million and
consisted primarily of financing for the importation of raw materials and
equipment, and working capital financing. As of December 31, 2002, 55.7% of our
short-term debt was denominated in foreign currencies, with an annual weighted
average interest rate of approximately 9.9%.


                                      89


<PAGE>


      LONG-TERM DEBT

      As of December 31, 2002, our long-term debt, excluding the current
portion of long-term debt, totaled R$3,879.3 million, of which R$718.9 million
was denominated in reais. The remainder was denominated in U.S. dollars and
Japanese Yen. The current portion of our local long-term debt totaled R$292.5
million as of December 31, 2002.

<TABLE>
<CAPTION>
                                                                LONG-TERM
                                                             DEBT MATURITY(1)
<S>                                                           <C>
                                                             (R$ in millions)
2004.........................................................         1,460.0
2005.........................................................           239.2
2006.........................................................           172.1
2007.........................................................           131.0
2008.........................................................            61.7
2009 and later...............................................         1,815.3
TOTAL........................................................         3,879.3

-------------------
Amounts may not add due to rounding.

(1) Excludes the current portion of long-term debt.
</TABLE>

      In accordance with our foreign currency risk management policy, we have
consummated forward and cross-currency interest rate swap contracts in order to
mitigate currency and interest rate risks. See "Quantitative and Qualitative
Disclosures About Market Risk" for our policy with respect to mitigating
foreign currency and interest rate risks through the use of financial
instruments and derivatives.

      As of December 31, 2001, our long-term debt, excluding the current
portion of long-term debt, totaled R$2,849.4 million, of which R$771.0 million
was denominated in reais. The remainder was denominated in Japanese Yen and
U.S. dollars. The current portion of our long-term debt totaled R$280.3 million
as of December 31, 2001.

      As of December 31, 2000, our long-term debt, excluding the current
portion of long-term debt, totaled R$927.6 million, of which R$701.8 million
was denominated in reais. The remainder was denominated in U.S. dollars. The
current portion of our long-term debt totaled R$381.6 million as of December
31, 2000.

      Our cash interest paid was R$559.5 million, R$260.5 million, and R$265.8
million for 2002, 2001 and 2000, respectively.

      In August 2001, AmBev raised Japanese Yen 39,060 million through a
syndicated loan. The loan has a three-year maturity and an interest rate of Yen
LIBOR plus 2.37% per annum. We have contracted cross currency interest rate
swaps and forward contracts to mitigate the currency risk, swapping the
currency to U.S. dollars and fixing our interest rate at LIBOR plus 5.7% per
annum, varying over the term of the loan. This exposure was simultaneously
swapped to reais at a floating rate of interest consistent with our treasury
policies. This loan is jointly guaranteed by AmBev and its subsidiaries and is
subject to indebtedness and liquidity ratios.

      In December 2001, CBB issued U.S.$500 million 10 1/2% notes due 2011,
fully guaranteed by AmBev. This offering significantly increased the average
maturity of outstanding debt. The transaction was priced at 98.56% of the
nominal principal amount with a coupon rate of 10.5%. On August 28, 2002,


                                      90


<PAGE>


we consummated an SEC registered exchange offer. These notes contain certain
covenants and events of default which, if triggered, cause accelerated
amortization. The proceeds of the syndicated loans and the notes were used
principally to repay short-term debt, but also to finance part of AmBev's
capital expenditure program and for general corporate purposes. Pursuant to
SEC Rule SX 3-10, we have presented in the notes to our annual consolidated
financial statements consolidating schedules which present the stand-alone
Brazilian GAAP balance sheets, statements of operations and of cash flows of
AmBev (holding company), CBB and other entities included in AmBev's
consolidated financial statements as at and for each of the three years in the
period ended December 31, 2002.

      Our long-term debt at December 31, 2002 our reais denominated borrowings
consisted primarily of long-term plant expansion and other loans from
governmental agencies including the Brazilian Economic and Social Development
Bank (BNDES), and BNDES programs, including Fund for Financing the Acquisition
of Industrial Machinery and Equipment (FINAME), and Financing Fund for Studies
and Projects (FINEP). In May 2001 we consummated a further line of credit
agreement with BNDES totaling R$216.5 million, of which R$168.2 million was
received in 2001. The line of credit becomes payable after one year in monthly
installments with final maturity in December 2008.

      At December 31, 2001, R$3,527.4 million of our total borrowings
(including the current portion of long term debt) were denominated in foreign
currencies. At the December 31, 2001 exchange rate, R$694.7 million represents
the Japanese Yen denominated syndicated loan, R$1,164.6 million the U.S. dollar
denominated 10 Year Senior Loan Notes, R$1,178.5 million represents U.S. dollar
denominated raw material import financing, and the remainder of R$489.6 million
other U.S. dollar denominated debt.

      Quinsa, in which we acquired an economic interest of 40.475% on January
31, 2003, was in default of certain loan covenants as at December 31, 2002 and
March 31, 2003 which could result in an acceleration of the amortization of the
loans due. Quinsa management is currently renegotiating with the financial
institutions. Quinsa is not included in our consolidated financial statements
at December 31, 2002.

      SECURED DEBT

      Certain of our loans, with an aggregate outstanding principal balance of
R$797.3 million at December 31, 2002, are secured by either our facilities
located in, or equipment in our facilities located in, Agudos, Jacarei,
Minas Gerais, Nordeste, Aguas da Serra (Guarulhos), Aguas Claras
(Sergipe),  Nova Rio (Rio de Janeiro), Brasilia, Teresina, Manaus, Aquiraz,
Santa Catarina, Cebrasa, Natal, Jacarepagua, Jundiai, Curitiba, and
Sapucaia. The loans, which include the loans provided by BNDES, were used to
expand or modernize our facilities and equipment.

      SALES TAX DEFERRALS AND OTHER TAX CREDITS

      We currently participate in several programs by which a portion of
payments of value-added tax on sales and services (ICMS) due from sales
generated by specific production facilities are deferred for periods of
generally five years from their original due date. The total amount deferred at
December 31, 2002, including ICMS financing, was R$803.0 million, as disclosed
in note 11 to our financial statements. Percentages deferred typically range
from 40% to 100% over the life of the program. Balances deferred generally
accrue interest and are partially inflation indexed, with adjustments generally
set at 60% to 80% of a general price index. The amount of sales taxes deferred
at December 31, 2002 included R$154.1 million which will become payable through
2003 and R$306.0 million thereafter. The remaining R$342.0 million relates to
ICMS financing.  We also participate in ICMS value-added tax credit programs
offered by various Brazilian states which provide tax credits to offset ICMS
value-added tax payable. In return, we are committed to meeting certain
operational requirements including, depending on the State, production volume
and employment targets, among others. The grants are received over the lives of
the


                                      91


<PAGE>


respective programs. In the years ended December 31, 2002 and 2001 we recorded
R$150.8 million and R$94.5 million, respectively, of tax credits as a
reduction of indirect taxes on sales. The benefits granted are not subject to
withdrawal in the event that we do not meet the program's targets; however,
future benefits may be withdrawn.

      COMMITMENTS AND CONTINGENCIES

      The following table summarizes AmBev's significant contractual
obligations and commitments that impact its liquidity:

<TABLE>
<CAPTION>
<S>                                            <C>                    <C>                <C>                    <C>
                                                   UP TO 1 YEAR       2-3 YEARS         AFTER 3 YEARS         TOTAL
                                                  ----------------   ------------     -----------------     ----------
                                                                              (R$  in millions)

Long-term debt(1).............                         607.4           1,699.1               2,180.2         4,486.7
Sales tax deferrals(2)........                         154.1             136.1                 170.8           461.0
Capital expenditure commitments                        124.5                                                   124.5
Plastic procurements(3)                                140.0             280.0                 280.0           700.0
                                                    ---------         ---------             ---------       ----------
Total contractual cash commitments                   1,026.0           2,115.2               2,631.0         5,772.3

------------------
(1) Includes current portion. Detailed in note 10 to our audited financial statements.

(2) The sales tax deferrals are detailed in note 11 to our financial statements. The total amount deferred of R$803.0 million
    considered in that note includes R$461.0 million of sales tax deferrals and R$342.0 million of ICMS financing initiatives.
    The latter is included within the long-term debt balance in the table above, as they are financing in nature.

(3) We have contracts with certain key suppliers to buy volumes of key materials in our production and packaging processes.
    We have a contract to purchase R$140.0 million per annum for the next five years of plastics for PETs. Further, we have
    contracts to buy other key materials, including aluminum and natural gas, but without fixed volumes or values. These amounts
    are currently unquantifiable, and have therefore not been included in the table above.
</TABLE>

      Pursuant to the agreement with BAC relating to the Quinsa Class A Shares,
AmBev has a call option to acquire 373.5 million Quinsa Class A Shares held by
BAC in exchange for newly issued shares of AmBev, which may be exercised by
AmBev beginning in April 2009 and in April of each year thereafter, and BAC has
a put option to sell to AmBev the 373.5 million Quinsa Class A Shares held by
BAC in exchange for newly issued shares of AmBev, which may be exercised by BAC
beginning in April 2003 and in April of each year thereafter. See "Information
on the Company-Acquisition of Interest in Quinsa". The price of the shares will
be calculated based on the EBITDA of both AmBev and Quinsa at the time of
exchange. Even though the put and call options are not considered a commitment
on our part, either we or BAC may decide to exercise it in the future.

      We are subject to numerous commitments and contingencies with respect to
tax, labor, distributors and other claims. To the extent that we believe these
contingencies will probably be realized, they have been recorded in the balance
sheet. As discussed in "Operating and Financial Review and Prospectus-Critical
Accounting Policies-Contingencies-Unrecognized exposures", these have been
estimated at R$976.0 million but are not considered commitments.

      CAPITAL INVESTMENT PROGRAM

      In 2002, capital expenditures on property, plant and equipment totaled
R$522.3 million. These expenditures included investments in quality,
automation, modernization, replacement of packaging lines, and others of
approximately R$192.7 million, investment in warehousing for direct
distribution of R$149.9 million, cooler investments of R$72.4 million,
expenditures for the replacement of bottles and crates of R$77.7 million and
continued investments in information technology of R$29.6 million. Investments
in subsidiaries and affiliates, including acquisition of intangible assets net
of cash, totaled R$75.6 million and included the purchase of an additional
stake in Astra.


                                      92


<PAGE>


      In 2001, capital expenditures in plant and equipment totaled R$446.8
million. These expenditures included investments in quality, automation,
modernization, replacement of packaging lines, and others of approximately
R$261.0 million, investment in warehousing for direct distribution of R$83.4
million, expenditures for the upgrade and replacement of bottles and crates of
R$66.5 million and continued investments in information technology of R$35.9
million. Investments in subsidiaries and affiliates, including acquisition of
intangible assets net of cash, totaled R$220.1 million and included the
purchase of 95.4% of the voting capital of Cympay and the increase of our
participation in Polar to 98.1% of the voting capital.

      We continually evaluate possible acquisitions of, or investments in,
businesses, products and technologies that are complementary to our business
and any such acquisitions or investments may be financed with additional debt.
We also announced our investment in Peru, on February 19, 2003. This project
will involve the construction of a greenfield facility and a distribution
network. This investment will involve approximately U.S.$38.0 million of
capital expenditure, working capital and launch expenses during 2003, with a
view to being operational in  2004.

      AmBev is currently constructing a brewery in Guatemala in partnership
with CabCorp, the main Pepsi bottler in Central America. Certain of the
facilities' equipment is being transferred from other facilities in Brazil
thereby optimizing certain underutilized assets following the Brahma and
Antarctica merger. Total expected investment should amount to U.S.$50 million.

      We anticipate an increase in capital expenditure in 2003 as a result of
our focus on direct distribution and our decision to increase the number of
sub-zero coolers.

OFF-BALANCE SHEET ARRANGEMENTS

      We have a number of off-balance sheet items which have been disclosed
elsewhere in this annual report. They include the following:

         o   Future committed capital expenditures of R$124.5 million, which
             have been disclosed in "-Liquidity and Capital Resources
             -Commitments and contingencies";

         o   The FAHZ. As described in "-Critical Accounting Policies", for
             the purposes of Brazilian GAAP, we do not consolidate the assets
             and liabilities of the FAHZ, although we do so for U.S. GAAP
             purposes. While we record the benefit obligation for Brazilian
             GAAP, the remaining assets and liabilities are off-balance sheet
             for the purposes of Brazilian GAAP financial statements. See note
             14 (c) of the financial statements for more information;

         o   We have a number of derivatives which we manage to mitigate our
             exposure to risk, as disclosed in "Quantitative and Qualitative
             Disclosures about Market Risk". The nominal value of open
             derivatives contracts on December 31, 2002 is R$4,761.5 million;

         o   Raw material purchase contracts. We have included details of our
             contract commitments not currently held on balance sheet with
             regard to raw material purchase contracts in "-Commitments and
             contingencies". This includes commitments to purchase R$700.0
             million of plastic over the following 5 years;

         o   Contingencies which represent possible, though not probable, risk
             of loss have not been provided in our balance sheet and amount to
             R$976.0 million;

         o   We have contracts regarding our sales of the Bavaria brand to
             Molson, and the acquisition of our interest in Quinsa, which have
             potential future impacts. With regard to the former, we may
             receive


                                      93


<PAGE>


             further disposal proceeds, subject to certain brand market share
             criteria being met. See "Background on the Company-Brazilian
             Antitrust Approval". With regard to Quinsa, we may be obliged to
             acquire the remaining interest, subject to certain put and call
             options, which can be exercised by the shareholders of BAC or
             ourselves. See "Information on the Company-Joint Ventures and
             Strategic Alliances". These do not, however, represent
             guarantees, but will only be realized based on the occurrence of
             contingent events; and

         o   We have no special purpose vehicles or other unconsolidated
             interests in which we have material commitments, guarantees or
             contingencies.


                                      94


<PAGE>


Directors, Senior Management and Employees

                     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

      The Board of Directors and the executive officers oversee AmBev's
administration. The Board of Directors is comprised of three to 15 members who
must be shareholders of AmBev and provides the overall strategic direction of
AmBev. Directors are elected at general shareholders' meetings by holders of
common shares for a three-year term. Day-to-day management is delegated to the
executive officers of AmBev, who must number at least two but no more than 15.
The Board of Directors appoints executive officers for a two-year term. The
AmBev shareholders' agreement regulates the election of directors of AmBev by
the controlling shareholders. See "Major Shareholders and Related Party
Transactions-AmBev Shareholders' Agreement-Management of AmBev".

DIRECTORS

      The following table sets forth information with respect to the directors
of AmBev:

<TABLE>
<CAPTION>
BOARD OF DIRECTORS(1)
<S>                                        <C>         <C>                      <C>      <C>
NAME                                      AGE(2)     POSITION                DIRECTOR     TERM
                                                                             SINCE        EXPIRES
------------------------------------     -------- ------------------------   --------     -------
Marcel Herrmann Telles.............         53    Co-Chairman and Director   1999         2005
Victorio Carlos De Marchi..........         64    Co-Chairman and Director   1999         2005
Jorge Paulo Lemann.................         63    Director                   1999         2005
Carlos Alberto da Veiga Sicupira...         55    Director                   1999         2005
Jose Heitor Attilio Gracioso.......         71    Director                   1999         2005
Roberto Herbster Gusmao............         80    Director                   1999         2005
Vicente Falconi Campos.............         62    Director                   1999         2005
Diego Fernando Miguens Bemberg.....         48    Director                   2003         2005

ALTERNATE MEMBERS

Roberto Moses Thompson Motta.......         45    Alternate Director         1999         2005
Fersen Lamas Lambranho.............         41    Alternate Director         2002         2005
</TABLE>
--------------------
(1)   Marcel Telles, Co-Chairman of the Board of Directors of AmBev, is a
      member of the Board of Directors of Braco and ECAP, the former
      controlling shareholders of Brahma, while Victorio Carlos De Marchi, a
      Co-Chairman of the Board of Directors, was appointed by the FAHZ, the
      former controlling shareholder of Antarctica. Braco and ECAP appointed
      two additional directors-Jorge Paulo Lemann and Carlos Alberto Sicupira.
      The FAHZ appointed two additional directors-Jose Heitor Attilio Gracioso
      and Roberto Herbster Gusmao. Both alternate directors were appointed by
      Braco and ECAP, the former controlling shareholders of Brahma. Diego
      Fernando Miguens Bemberg was appointed in substitution to Jose de Maio
      Pereira da Silva by the members of the Board of Directors according to
      the terms of the Company's by-laws, referred by Quinsa. The alternate
      members of the Board of Directors of AmBev were appointed in order to
      replace, if and when necessary, any of the directors appointed by Braco
      and ECAP.

(2)   Age as at May 31, 2003.

      The following are brief biographies of each of AmBev's directors:

      MARCEL HERRMANN TELLES. Mr. Telles is the Co-Chairman of the Board of
Directors of AmBev. Mr. Telles is a partner of GP Investimentos Ltda. He served
as Chief Executive Officer of Companhia Cervejaria Brahma from 1989 to 1999. He
is also currently a member of the Board of Directors of Lojas Americanas S.A.
Mr. Telles has a degree in economics from the Federal University of Rio de
Janeiro and attended the Owners/Presidents Management Program at Harvard
Business School. His principal business address is Rua Dr. Renato Paes de
Barros 1017, 4th floor, Sao Paulo, Brazil.

                                      95


<PAGE>


      VICTORIO CARLOS DE MARCHI. Mr. De Marchi is the Co-Chairman of the Board
of Directors of AmBev and the Chairman of the Board of Directors of CBB. Mr. De
Marchi joined Antarctica in 1961 and held various positions during his tenure,
including Chief Executive Officer from 1998 to April 2000. Mr. De Marchi was
also president of the Brazilian beer producers' association (Sindicerv) until
February, 2002 and is a member of the orientation committee of the FAHZ. Mr. De
Marchi has a degree in economics from Faculdade de Economia, Financas e
Administracao de Sao Paulo and a law degree from Sao Bernardo do Campo
Law School. His principal business address is Rua Dr. Renato Paes de Barros
1017, 4th floor, Sao Paulo, Brazil.

      JORGE PAULO LEMANN. Mr. Lemann is a member of the Board of Directors of
AmBev. Mr. Lemann is a partner of GP Investimentos Ltda. He is also a board
member of Lojas Americanas S.A. in Brazil, the Gillette Company and Swiss Re;
Chairman of the Latin American Advisory Committee of the New York Stock
Exchange; founder and board member of Fundacao Estudar, provider of
scholarships for students in Brazil; and member of the International Advisory
Boards of the Credit Suisse Group and DaimlerChrysler. He previously served as
a member of the Board of Directors of Brahma from 1990 to 2001. He holds a B.A.
degree from Harvard Business School, class of 1961. His principal business
address is Av. Brig. Faria Lima, 3729, 7th floor, Sao Paulo, Brazil.

      CARLOS ALBERTO DA VEIGA SICUPIRA. Mr. Sicupira is a member of the Board
of Directors of AmBev. He also served as a member of the Board of Directors of
Brahma from 1990 until 1999. Mr. Sicupira is a partner of GP Investimentos
Ltda. He is also currently a board member of Sao Carlos Empreendimentos e
Participacoes, ALL and Lojas Americanas S.A. He is also a member of the
Board of Associates of Harvard Business School since 1988. Mr. Sicupira has a
degree in business administration from the Federal University of Rio de Janeiro
and a degree from the Harvard Business School. His principal business address
is Av. Brig. Faria Lima, 3729, 7th floor, Sao Paulo, Brazil.

      JOSe HEITOR ATTiLIO GRACIOSO. Mr. Gracioso is a member of the Board
of Directors of AmBev. Mr. Gracioso joined Antarctica in 1946 and held various
positions during his tenure. In 1994, Mr. Gracioso was elected to Antarctica's
Board of Directors and, in 1999, he was elected Chairman of the Board of
Directors of Antarctica, a position he held until April 2000. He holds a degree
in marketing from the Escola Superior de Propaganda de Sao Paulo, a degree
in business administration from Fundacao Getulio Vargas and a degree
in law from Sao Bernardo do Campo Law School. His principal business address
is Av. Brig. Faria Lima, 3900, 11th floor, Sao Paulo, Brazil.

      ROBERTO HERBSTER GUSMaO. Mr. Gusmao is a member of the Board of
Directors of AmBev. He was previously Vice-Chairman of the Board of Directors
of Antarctica from 1998 until April 2000. Mr. Gusmao was Chief Executive
Officer of Cervejaria Antarctica-Niger S.A. from 1968 to 1982, and from 1986 to
1997. He was the Brazilian Minister of Trade and Industry from 1985 to 1986 and
President of Banco de Desenvolvimento do Estado de Sao Paulo from 1982 to
1983. Mr. Gusmao was also a professor and founder of graduation and
post-graduation programs at Fundacao Getulio Vargas from 1954 to 1969.
Mr. Gusmao has a law degree from the University of Minas Gerais Law School.
His principal business address is Av. Brig. Faria Lima, 3900, 11th floor,
Sao Paulo, Brazil.

      VICENTE FALCONI CAMPOS. Mr. Campos is a member of the Board of Directors
of AmBev. He serves as a member of the Institutional Council of Fundacao
de Desenvolvimento Gerencial-FDG and is a member of the board of directors of
Sadia. Mr. Campos is also a consultant for the Brazilian government and
Brazilian and multinational companies such as Grupo Gerdau, Grupo Votorantin
and Mercedes Benz. He holds a degree in Mining and Metal Engineering from the
Federal University of Minas Gerais, and M.Sc. and Ph.D. degrees from Colorado
School of Mines (USA). His principal business address is Av. Contomo, 7962,
10th floor, Belo Horizonte, Brazil.

                                      96


<PAGE>



      DIEGO FERNANDO MIGUENS BEMBERG. Mr. Bemberg is a member of the board of
Directors of AmBev. He serves as a member of the board of Directors of BAC,
Dinaluca S.A., Abrojo Alto S.A., Inversiones Delta S.A., Mojame S.A., MB
Holding S.A., Cadiluna S.A., Los Menucos S.A., Patagonia Gold S.A., Mineria
Puerto Madryn S.A., Minamalu S.A., MPV S.A. and Puerto Chico S.A.  Mr. Bemberg
is an entrepreneur with principal business address at Av. del Libertador 498,
27th floor, Buenos Aires, Argentina.

      ROBERTO MOSES THOMPSON MOTTA. Mr. Motta is an alternate member of the
Board of Directors of AmBev. Mr. Motta is a partner of GP Investimentos Ltda.
He is also a board member of  Submarino, Lojas Americanas. He worked in the
investment banking division of Banco de Investimentos Garantia S.A. from 1986
to 1992. He holds a degree in engineering from the Pontificia Universidade
Catolica do Rio de Janeiro, and an M.B.A. from the Wharton School of the
University of Pennsylvania. His principal business address is Av. Brig. Faria
Lima, 3729, 7th floor, Sao Paulo, Brazil.

      FERSEN LAMAS LAMBRANHO. Mr. Lambranho is an alternate member of the Board
of Directors of AmBev. Mr. Lambranho is a partner at GP Investimentos Ltda. and
has been a Board Member of Lojas Americanas since 1998, of Telemar since 1999
and of Sao Carlos Empreendimentos e Participacoes since 1999. Prior to
joining GP Investimentos, Mr. Lambranho was CEO of Lojas Americanas. Mr.
Lambranho has a B.S. in Engineering from Universidade Federal do Rio de
Janeiro, an M.S. in Business Administration from Universidade Federal do Rio de
Janeiro (COPPEAD) and an O.P.M. from Harvard Business School. His principal
business address is Av. Brigadeiro Faria Lima 3729, 7th floor, Sao Paulo,
Brazil.

      EXECUTIVE OFFICERS

      The following table sets forth information with respect to the executive
officers of AmBev:

<TABLE>
<CAPTION>
NAME                        AGE          (1)TITLE                                                CURRENT POSITION        TERM
                                                                                                 HELD SINCE              EXPIRES
--------------------------- ----   -----------------------------------------------------------   ----------------        -------
<S>             <C>        <C>    <C>                                                               <C>                      <C>
Magim Rodriguez Junior.....  61    Chief Executive Officer                                          1999                 2004
Luis Felipe Pedreira Dutra
Leite......................  37    Chief Financial Officer and Investor Relations Officer           2000                 2006
Jose Adilson Miguel........  61    Distribution Officer                                             2000                 2004
Claudio Braz Ferro.........  48    Manufacturing Officer                                            2000                 2006
Carlos Alves de Brito(2)...  43    Director of Operations                                           2000                 2006
Juan Manuel Vergara Galvis.  43    Executive Officer of Soft drink and Non-alcoholic Beverages      2000                 2006
                                   Division
Miguel Nuno da Mata
Patricio...................  37    Marketing Officer                                                2000                 2004
Eduardo Muzzi..............  52    General Counsel - Officer                                        2003                 2004

---------------------
(1)  Age at May 31, 2003.

(2)  Mr. Brito is Executive Officer since 2000, but Director of Operations since 2002.
</TABLE>

      The following are brief biographies of each of AmBev's executive
officers.

      MAGIM RODRIGUEZ JuNIOR. Mr. Rodriguez has been the Chief Executive
Officer of AmBev since his appointment in 1999. He is also Chief Executive
Officer of CBB. He has been associated with Brahma since 1989, serving first as
Marketing Officer. He holds a degree in business administration and accounting
from Mackenzie University. His principal business address is Rua Dr. Renato
Paes de Barros 1017,  4th floor, Sao Paulo, Brazil.


                                      97


<PAGE>

      LUIS FELIPE PEDREIRA DUTRA LEITE. Mr. Dutra is the Chief Financial
Officer and Investor Relations Officer of AmBev and the Chief Financial Officer
of CBB. He joined Brahma in 1990 and has held numerous positions during his
tenure. Mr. Dutra holds a degree in economics and an M.B.A. in financial
management from the University of Sao Paulo. His principal business address
is Rua Dr. Renato Paes de Barros 1017, 4th floor, Sao Paulo, Brazil.

      JOSe ADILSON MIGUEL. Mr. Miguel is the Executive Distribution Officer
of AmBev. He has held various management positions during his tenure with
Brahma since 1962. He was named Commercial Manager in 1970, General Marketing
Manager in 1976, and Marketing Officer in 1980. His principal business address
is Rua Dr. Renato Paes de Barros 1017, 4th floor, Sao Paulo, Brazil.

      CLAUDIO BRAZ FERRO. Mr. Ferro is the Executive Manufacturing Officer
of AmBev and CBB. He started working with Brahma in 1977 as a Brew Master and
was responsible for the production and bottling divisions. In 1984, he was
appointed Manager of the Industrial Department and in 1990, Manager of the Rio
de Janeiro plant. He holds a degree in industrial chemistry from the Federal
University of Santa Maria. His principal business address is Rua Dr. Renato
Paes de Barros 1017, 4th floor, Sao Paulo, Brazil.

      CARLOS ALVES DE BRITO. Mr. Brito is the Director of Operations of AmBev
and CBB. He joined Brahma in 1989 and has held various management positions
during his tenure. Mr. Brito holds a degree in mechanical engineering from the
Federal University of Rio de Janeiro and an M.B.A. from Stanford University.
His principal business address is Rua Dr. Renato Paes de Barros 1017,
4th floor, Sao Paulo, Brazil.

      JUAN MANUEL VERGARA GALVIS. Mr. Vergara is the Executive Soft Drink and
Non-alcoholic Beverages Officer of AmBev. Prior to this appointment he was the
Marketing Officer of Brahma and AmBev from 1997 to 2000. He holds a degree in
business administration from the Colegio de Estudos Superiores de
Administracion, in Bogota, Colombia. His principal business address is Rua
Dr. Renato Paes de Barros 1017, 4th floor, Sao Paulo, Brazil.

      MIGUEL NUNO DA MATA PATRICIO. Mr. Patricio is the Executive Officer of
Marketing of AmBev. He joined the company in 1999. Mr. Patricio has a degree in
business administration from Fundacao Getulio Vargas in Sao Paulo. His
principal business address is Rua Dr. Renato Paes de Barros 1017, 4th floor,
Sao Paulo, Brazil.

      EDUARDO MUZZI. Mr. Muzzi is the General Counsel and Officer of AmBev. He
joined the company in 2000. Mr. Muzzi holds a Law degree from the Federal
University of Minas Gerais in Belo Horizonte. His principal business address is
Rua Dr. Renato Paes de Barros 1017, 4th floor, Sao Paulo, Brazil.

BOARD PRACTICES AND CORPORATE GOVERNANCE

      In 2002, we held approximately 300 meetings with investors and analysts.
We also participated in conferences and road shows in Brazil, the United States
and Europe. Additionally, our Investor Relations website is constantly updated,
providing the market with information which is virtually real-time.

      We host quarterly conference calls, transmitted simultaneously on the
Internet, to clarify financial and operating results as well as answer
questions from the investment community. In March 2003, we organized our first
site visit for investors and analysts.


                                      98


<PAGE>

      FISCAL COMMITTEE

      AmBev has a permanent fiscal committee (Conselho Fiscal) which reviews
AmBev's internal financial statements, meets with AmBev's independent
accountants on financial matters and recommends the selection of independent
accountants for AmBev and its subsidiaries. Current members of the committee
are Messrs. Antonio Luiz Benevides Xavier, Everardo de Almeida Maciel e Luiz
Fernando Mussolini, and their alternate members are Messrs. Luiz de Santa Rita
Matta, Ricardo Scalzo and Jose Fiorita, respectively. No member of the
fiscal committee is also a member of the Board of Directors or the Executive
Committee.

      THE BOARD OF DIRECTORS

      Except for Mr. Fersen Lambranho, who was recently appointed alternate
member of the Board of Directors, and Mr. Diego Meguens, recently appointed
member of the Board of the Directors as a result of the Quinsa transaction, all
of the current members of the Board of Directors of AmBev have been members
since 1999 and their terms expire in 2005.

      The Board of Directors has eight members who were elected in 1999 and had
their mandates renewed in 2002 until 2005. Board members use their profound
knowledge of the business to ensure that AmBev's long-term vision and short-
term performance are maintained. The Board also makes sure that the Company
pursues challenging short-term business targets without compromising its long-
term growth-at the same time ensuring that the values of the AmBev culture are
practiced and disseminated.

      The Chairman of the Board and the Chief Executive Officer of the Company
are separate roles performed by different people. The Board of Directors is
supported in its decision-making by the following committees:

      EXECUTIVE COMMITTEE

      The Executive Committee is the main link between the policies and
decisions made by the Board of Directors and AmBev's management team. The
Executive Committee's explicit responsibilities are:

      o     to make medium-term planning proposals to the Board;

      o     to propose the Company's annual performance targets and the
            budgets needed to attain the projected goals; and

      o     to monitor the Company's standing through analysis of its results
            and market developments.

      It is also responsible for the interests of AmBev's people, and its
members are involved in recruitment programs, variable remuneration policies
and in the spreading of our culture.

      AUDIT COMMITTEE

      The Audit Committee acts on behalf of the Board of Directors and is
responsible for the integrity and accuracy of the Company's financial
statements and the performance of internal and external auditors. It also
oversees the legal compliance of the Company's operations, the management of
internal controls and the appointment of the external auditors.



                                      99


<PAGE>


      FINANCE COMMITTEE

      The Finance Committee analyzes and monitors the Company's annual
investment plan and ensures that it is carried out. This Committee assesses
merger and acquisition opportunities before forwarding them to the Board of
Directors. It is also the Finance Committee's responsibility to evaluate the
best capital structure for the Company, with the aim of maximizing Economic
Value Added (EVA).

      CONSULTING COMMITTEE

      The Shareholders' General Meeting held on April 25, 2003 included a
provision in the By-laws authorizing the Board of Directors to create a
Consulting Committee, formed by three independent members appointed by the
Board of Directors each three years or in case of vacancy. The Consulting
Committee shall have the following attributions:

      o     to issue opinions to: the Shareholders General Meetings concerning
            the conducting of business and compliance of statutory obligations
            by the Company's senior management; the Company's management
            discussions and analysis report; and any submissions to be made by
            the Board of Directors to the Shareholders General Meetings;

      o     to provide economical, industry and commercial data to the Board
            of Directors related to the Company's main purpose, including
            opinions and recommendations;

      o     to make recommendations concerning new business and general issues
            submitted to their consultation.

      The current members of the Consulting Committee appointed by the Board of
Directors, with a term expiring in 2006, are: Messrs. Jose de Maio Pereira
da Silva, Paulo Cezar Castello Branco Chavez de Aragao and Ary Oswaldo
Mattos Filho and their offices will expire in 2006.

COMPENSATION

      The aggregate remuneration of all members of the Board of Directors and
senior management of AmBev in 2002 for services in all capacities amounted to
R$45.7 million, including variable pay (bonuses). The members of the Board of
Directors and senior management received some additional benefits provided to
all AmBev employees and their beneficiaries and covered dependents, such as
medical assistance, educational expenses and supplementary social security
benefits. All such benefits were provided through the FAHZ and, prior to this
the Brahma Welfare Foundation. The Board of Directors and AmBev's senior
management also receive benefits pursuant to AmBev's pension, profit-sharing
plan, and share purchase plan. For a description of these plans see "-Plans".

There are no benefits in kind provided to the directors of the Company. Neither
are there agreements between AmBev and any of its directors providing for
benefits upon termination of employment.

EMPLOYEES

      As of December 31, 2002, AmBev and its subsidiaries had approximately
18,570 employees, approximately 58% of whom were engaged in production, 38% of
whom were engaged in sales and distribution and 4% of whom were engaged in
administration.



                                      100


<PAGE>


      The following table sets forth the number of employees of AmBev and its
subsidiaries as of the end of the years indicated:

                         EMPLOYEES AS OF DECEMBER 31,
            -------------------------------------------------------
               2002                  2001                  2000
            -----------------    --------------   -----------------
             18,570                18,136                18,172

      The following table shows the geographical distribution of AmBev's
employees as of December 31, 2002:

            GEOGRAPHICAL DISTRIBUTION OF AMBEV EMPLOYEES
LOCATION                                             NUMBER OF EMPLOYEES

Brazil..........................................             16,157
Argentina.......................................                890
Uruguay.........................................                370
Venezuela.......................................                940
Paraguay........................................                213
                                                      -------------
                                                             18,570
                                                      -------------
                                                      -------------
      TRAINING.

      In 1998, Brahma created the "Brahma University" (now "AmBev University")
to train and enhance our employees' performance, and the performance of our
distributors' employees. In 2002, the AmBev University provided specific
training for 1,199 employees and its distributors, totaling 3,827 hours of
training. At the management level, AmBev's senior management and executive
officers participate in several business and technical training programs at
leading United States and European universities. Training schools in our major
facilities provide courses, mainly technical in nature, for supervisory and
operating personnel. Together with  the Brazilian beer producers' association
Sindicerv, AmBev also has established a training school at Vassouras, near Rio
de Janeiro, which includes a micro-brewery, bottling line and malting plant.
AmBev also maintains a partnership with SIEBEL Institute in Chicago and with
Domens Academie in Munich, Germany, where its personnel responsible for beer
production is introduced to new worldwide technologies and is able to visit
other brewers and equipment suppliers.

      AmBev also operates the AmBev University TV. It is a proprietary
distance-learning tool operated over a secure satellite broadcasting system
that connects all of AmBev's business units and a majority of our third-party
distributors. In 2002, we provided standardized effective training to nearly
13,000 sales people. The television program coursework is reinforced and
supplemented with online testing to closely monitor the learning process of
each sales person, allowing us to pinpoint weaknesses and then act to provide
individual training programs, as well as providing feedback to improve the
quality of the broadcast. AmBev believes that its personnel are well trained
and kept abreast of current technical and business developments.

      INDUSTRIAL RELATIONS.

      All of AmBev's employees are represented by labor unions, but only 6.9%
are actually members of labor unions. The number of administrative and
distribution employees who are members of labor unions is not significant.
Salary negotiations are conducted annually between the workers' unions and
AmBev. Collective bargaining agreements are negotiated separately for each
facility or distribution center.


                                      101


<PAGE>


AmBev's collective bargaining agreements have a term of one year, and AmBev
usually enters into new collective bargaining agreements on or prior to the
expiration of the existing agreements. AmBev believes that its relations with
its employees are satisfactory, and there have been no strikes or significant
labor disputes in the past eight years.

      HEALTH AND SEVERANCE BENEFITS.

      In addition to wages, AmBev's employees receive additional benefits from
AmBev. Some of these benefits are mandatory under Brazilian law, some are
provided for in collective bargaining agreements, and others are voluntarily
given by AmBev. The benefits packages of AmBev's employees consist of benefits
provided both by AmBev directly and by AmBev through the FAHZ, which provides
medical, dental, educational and social assistance to current and retired
employees of AmBev and their beneficiaries and covered dependents, either for
free or at a reduced cost. AmBev may voluntarily contribute up to 10% of its
consolidated net income, as determined in accordance with Brazilian GAAP and
AmBev's by-laws, to support the FAHZ. As part of the process of merging the
Brahma Welfare and FAHZs (see "Major Shareholders and Related Party
Transactions-Major Shareholders-Share Ownership History of AmBev's Major
Shareholders"), an actuarial evaluation was carried out to determine the level
of contributions required to be made to the FAHZ to provide benefits to all
employees compatible with those formerly provided by the Brahma Welfare
Foundation.

      AmBev is required to contribute 8% (with respect to CBB's employees) and
8.5% (with respect to the employees of Arosuco, Disbam, AmBev, IAPP, Astra, IBA
Sudeste and Fratelli), of each employee's gross pay to an account maintained in
the employee's name in the Government Severance Indemnity Fund (FGTS). Under
Brazilian law, AmBev is also required to pay termination benefits to employees
dismissed without cause equal to 40% (in the case of  CBB's employees) and 50%
(for those of Arosuco, Disbam, AmBev, IAPP, Astra, IBA Sudeste and Fratelli),
of the accumulated contributions made by AmBev to the FGTS during the
employee's period of service.

      STOCK OWNERSHIP PLAN.

      AmBev has a stock ownership plan designed to attract and retain the
services of qualified directors, executives and employees. Both common and
preferred shares may be granted in the plan. As of December 31, 2002 the plan
had outstanding and exercisable rights to acquire 640,800,000 shares of AmBev.
The plan is administered by a committee, which includes non-management members
of the Board of Directors of AmBev. This committee periodically creates
programs under the stock ownership plan, defining the terms and employees to be
included, and establishes the price at which the rights to acquire shares are
to be issued. This price may not be less than 90% of the average price of the
shares traded on the stock market on the previous three business days, adjusted
by an inflation index to be defined by the committee for each program. The
number of shares which may be granted in each year cannot exceed 5% of the
total number of shares outstanding of each type of shares, although the amount
has always remained significantly below this level. When shares are acquired by
the employee, AmBev issues new shares or transfers treasury shares to the
option holder. Stock ownership rights granted have no final date to be
exercised. When the grantee leaves the company (other than upon retirement),
the rights to acquire shares are forfeited. If an employee decides to sell
shares acquired under the plan or an employee leaves the company, AmBev has the
right to buy such shares at a price equal to:

      o     the inflation-indexed price paid by such employee, if the employee
            sells the shares during the first 30 months after shares are
            acquired by the employee;



                                      102


<PAGE>

      o     50% of the inflation-indexed price paid, plus 50% of the
            prevailing market price, if the employee sells the shares after
            the first 30 months but before the 60th month after shares are
            acquired by the employee; or

      o     the market price, if the employee sells the shares more than 60
            months after shares are acquired by the employee.

      The Company provides advances to employees for the purchase of shares in
accordance with the established plan rules. Financing arrangements are normally
for periods of not more than four years and include interest of 8% per annum
over a designated general price index. These loans are guaranteed by the shares
which will be acquired under the plan. In order to comply with the Sarbanes-
Oxley Act of 2002, we are currently revising the terms of our stock ownership
plan to extend the financing for the purchase of shares upon exercise of the
right to acquire such shares exclusively to our employees and not to officers
or directors. At March 31, 2003 the outstanding balance of these loans amounted
to R$342.8 million and is classified as an asset under Brazilian GAAP and a
deduction  from shareholders' equity under U.S. GAAP.

      AMBEV PENSION PLAN.

      AmBev's pension plans are administered by the AmBev Pension Fund
(Instituto AmBev de Previdencia Privada) which is the successor of the Brahma
Pension Fund-Instituto Brahma de Seguridade Social- as from December 8, 2000.

      The AmBev Pension Fund operates both a defined-benefit pension plan and a
defined- contribution plan, which supplements benefits that the Brazilian
government social security system provides to our employees. The AmBev Pension
Fund was established solely for the benefit of our employees and its assets are
held independently. We nominate the three directors of the AmBev Pension Fund.
As of December 31, 2002, we had 5,324 participants in our plan of which 1,126
participated in the defined benefit plan and 4,198 in the defined contribution
plan.

      The AmBev Pension Fund is available to both active and retired employees.
Three months after joining us, employees may opt to join the defined
contribution plan. Upon leaving (unless upon retirement) members are required
to leave the AmBev Pension Fund. Members who joined after 1990 and request to
leave will receive their contributions in a single inflation indexed
installment.

      Prior to May 1998, when the defined contribution plan was launched, there
was only a defined benefit plan. The defined benefit plan was closed to new
participants as of this date. New employees of AmBev can only join the defined
contribution plan. At the time of adoption of the defined contribution plan,
active participants were given the option either to remain in the old plan, or
transfer their accumulated benefits to the defined contribution plan. The
defined contribution plan covers substantially all new employees.

      Pension costs relating to the AmBev defined contribution plan for the
year ended December 31, 2002 were approximately R$3.7 million compared to R$
3.5 million in 2001.

      The plan assets are comprised principally of time deposits and equity
securities (including 9,595,170 preferred shares and 88,664,850 common shares
of AmBev at December 31, 2002 with a total fair value of R$47.0 million as of
December 31, 2002), government securities and properties. All benefits are
calculated and paid in inflation-indexed reais.


                                      103


<PAGE>


      PROFIT-SHARING PLAN.

      AmBev's by-laws provide for the distribution of up to 10% of AmBev's net
income, as determined in accordance with Brazilian GAAP, to its employees.
Executive officers are eligible for profit-sharing in an amount not to exceed
the lower of their annual remuneration or 5% of AmBev's net income in the
aggregate.

      Payments under AmBev's profit-sharing plan are subject to the
availability of cash resources of AmBev. Executive officers' bonuses are
determined based upon the achievement of corporate, department or business-unit
and individual goals, established by the Board of Directors. All other
employees of AmBev are entitled to performance-based variable bonuses
calculated on an annual basis.

      Among all employees, up to 70% working at our headquarters and up to 60%
of production, sales and distribution employees, can be awarded bonuses. The
distribution of these bonuses is subject to a three-tier system in which AmBev
must first achieve efficiency targets approved by the Board of Directors.
Following that, each business unit must achieve its targets and finally
individual performance is ranked. Beginning in April 2003, AmBev changed the
rules for individual bonuses of the sales supervisors. Their results are ranked
each quarter and bonuses are paid twice a year, in August and in February.

      Our annual targets may be changed by the Board of Directors. For
employees involved in operations, we have a collective award for production
sites and distribution centers with outstanding performances. The bonus award
at the facility level is based on a ranking between the different plants, which
based on their relative ranking may or may not receive the bonus.

      Expenses of AmBev provisioned under these programs amounted to R$112.2
millions for the year ended December 31, 2002, R$81.3 million for the year
ended December 31, 2001 and R$53.7 million for the year ended December 31,
2000.

      Bonuses, commissions and collective awards to be shared among employees
depend on the financial results of AmBev and up to 25% of AmBev's annual EVA
(Economic Value Added) may be distributed, depending on the target real EBITDA
growth. According to AmBev's annual real EBITDA growth, the total amount shared
among employees, as a percentage of AmBev's annual EVA, is as follows:

      o     EBITDA growth < 15% = 0

      o     EBITDA growth from 15% up to 19.99% = 15% EVA

      o     EBITDA growth from 20% up to 20.99% = 20% EVA

      o     EBITDA growth form 21% up to 21.99% = 21% EVA

      o     EBITDA growth from 22% up to 22.99% = 22% EVA

      o     EBITDA growth from 23% up to 23.99% = 23% EVA

      o     EBITDA growth from 24% up to 24.99% = 24% EVA

      o     EBITDA growth > 25% = 25% EVA



                                      104


<PAGE>

      INDEPENDENT ACCOUNTANTS

      The audited financial statements herein have been audited by
PricewaterhouseCoopers Auditores Independentes, our independent accountants.
Their offices are located at Avenida Francisco Matarazzo, 1400, 05001-901
Sao Paulo, SP, Brazil. They are members of the Conselho Regional de
Contabilidade (Regional Board of Accountants of Sao Paulo) and their
registration number is CRC2SP000160/O-5.

DIRECTOR AND SENIOR MANAGEMENT SHARE OWNERSHIP

      The following table shows the amount, type and percentage of class of our
equity securities held by members of our Board of Directors and by senior
management as of June 16, 2003:

<TABLE>
<CAPTION>
NAME                                                               AMOUNT AND   AMOUNT AND
                                                                   PERCENTAGE   PERCENTAGE
                                                                   OF COMMON    OF PREFERRED
                                                                   SHARES       SHARES
-------------------------------------------                        ----------   ------------
<S>                                                                 <C>           <C>

Marcel Herrmann Telles(1)..................                           *            *
Victorio Carlos De Marchi(2)...............                           *           *
Jorge Paulo Lemann(3)......................                           *           *
Carlos Alberto da Veiga Sicurpira(4).......                           *           *
Jose Heitor Attilio Gracioso(5)............                           *           *
Roberto Herbster Gusmao(6).................                           *           *
Jose de Maio Pereira da Silva(7)...........                           *           *
Roberto Moses Thompson Motta(8)............                           *           *
Vicente Falconi Campos.....................                           *           *
Magim Rodriguez Junior.....................                           *           *
Luis Felipe Pedreira Dutra Leite...........                           *           *
Jose Adilson Miguel(9).....................                           *           *
Claudio Braz Ferro.........................                           *           *
Carlos Alves de Brito......................                           *           *
Juan Manual Vergara Galvis.................                           *           *
Eduardo Muzzi..............................                           *           *
Miguel Nuno da Mata Patricio...............                           *           *
Diego Fernando Miguens Bemberg.............                           *           *
Fersen Lamas Lambranho.....................                           *           *
</TABLE>
--------------------
*  Indicates that the individual holds less than 1% of the class of securities.

(1)   Does not include 7,365,698,440 common shares owned by Braco S.A. (Braco)
      and ECAP, and 888,214,820 shares owned by S-Braco Participacoes SA (S-
      Braco). Mr. Telles owns indirectly 25.0% of the voting capital of
      S-Braco, which, in turn, owns 84.55% of the voting capital of Braco,
      which, in turn, owns 99.74% of the voting shares of ECAP, and is also an
      intervening party to the AmBev shareholders'' agreement. See "Major
      Shareholders and Related Party Transactions-Major Shareholders-AmBev
      Shareholders' Agreement". Mr. Telles is also a counselor of the FAHZ.
      For information regarding the shareholdings of the FAHZ, see "Major
      Shareholders and Related Party Transactions-AmBev's Major Shareholders".

(2)   Mr. De Marchi is a counselor of the FAHZ. For information regarding the
      shareholding of the FAHZ, see "Major Shareholders and Related Party
      Transactions-AmBev's Major Shareholders".

(3)   Does not include 7,365,698,440 common shares owned by Braco and ECAP,
      and 888,214,820 shares owned by S-Braco. Mr. Lemann, owns indirectly
      50.0% of the voting shares of S-Braco, which, in turn, owns 84.55% of
      the voting share of Braco, which, in turn, owns 99.74% of the voting
      shares of ECAP and is also an intervening party to the AmBev
      shareholders' agreement. See "Major Shareholders and Related Party
      Transactions-Major Shareholders-AmBev Shareholders' Agreement".

(4)   Does not include 7,365,698,440 common shares owned by Braco and ECAP,
      and 888,214,820 shares owned by S-Braco. Mr. Sicupira owns indirectly
      25.0% of the voting shares of S-Braco, which, in turn, owns 84.55% of
      the voting share of Braco, which, in turn, owns 99.74% of the voting
      shares of ECAP, and is also an intervening party to the AmBev
      shareholders' agreement. See "Major Shareholders and Related Party
      Transactions-Major Shareholders-AmBev Shareholders' Agreement".

(5)   Mr. Gracioso is a counselor of the FAHZ. For information regarding the
      shareholding of the FAHZ, see "Major Shareholders and Related Party
      Transactions-AmBev's Major Shareholders".

(6)   Mr. Gusmao is a counselor of the FAHZ. For information regarding the
      shareholding of the FAHZ, see "Major Shareholders and Related Party
      Transactions-AmBev's Major Shareholders".

(7)   Mr. da Silva is a counselor of the FAHZ. For information regarding the
      shareholding of the FAHZ, see "Major Shareholders and Related Party
      Transactions-AmBev's Major Shareholders".


                                      105


<PAGE>

(8)   Does not include 7,365,698,440 common shares owned by Braco and ECAP.
      Mr. Motta is an executive officer of Braco and ECAP. Mr. Motta disclaims
      beneficial ownership of the shares of AmBev owned by Braco and ECAP.

(9)   Mr. Miguel is a counselor of the FAHZ. For information regarding the
      shareholding of the FAHZ, see "Major Shareholders and Related Party
      Transactions-AmBev's Major Shareholders".


Major Shareholders and Related Party Transactions


                              MAJOR SHAREHOLDERS

INTRODUCTION

      As of June 16, 2003, AmBev had 15,735,878,391 common voting shares and
22,801,455,371 preferred non-voting shares outstanding. AmBev has registered
two classes of American Depositary Shares (ADSs) pursuant to the Securities
Act: ADSs evidenced by American Depositary Receipts (ADRs) representing 100
preferred shares, and ADSs evidenced by ADRs representing 100 common shares. As
of June 16, 2003, there were 91,344,517 preferred ADSs outstanding
(representing 9,134,451,700 preferred shares) and 116,339 common ADSs
outstanding (representing 11,633,900 common shares). AmBev ADRs are issuable by
The Bank of New York pursuant to deposit agreements for common and preferred
shares.

CONTROL

      AmBev is controlled by Braco, ECAP and the FAHZ, which own in the
aggregate 70.92% of AmBev's common shares. In addition, Braco, ECAP and the
FAHZ, as well as Marcel Telles, Jorge Paulo Lemann and Carlos Sicupira, as
intervening parties, are parties to a shareholders' agreement relating to
AmBev. See "-AmBev Shareholders'' Agreement". As of June 16, 2003, FAHZ owns
24.11% of the common shares of AmBev. Braco and ECAP collectively own 46.81% of
the common shares of AmBev. Braco owns 99.74% of the voting shares of ECAP.
Approximately 84.55% of the voting shares of Braco, are owned by S-Braco. In
addition, S-Braco owns 5.64% of the common shares of AmBev directly. 50.0%,
25.0% and 25.0%, respectively, of the voting shares of S-Braco are indirectly
owned by Mr. Lemann, Mr. Sicupira and Mr. Telles through four holding
companies, Santa Judith Participacoes S.A. ("Santa Judith"), Santa Irene
Participacoes S.A. ("Santa Irene"), Santa Estela Participacoes S.A.
("Santa Estela") and Santa Prudencia Participacoes S.A. ("Santa
Prudencia"), each of which owns 25.0% of the voting shares of S-Braco. All
of the voting shares of Santa Judith and Santa Irene are owned by Mr. Lemann
and all of the common shares of Santa Estela and Santa Prudencia are owned
by Mr. Sicupira and Mr. Telles, respectively.

      SHARE BUYBACK PROGRAM

      In 2002, we acquired 89.5 million common shares and 701.3 million
preferred shares in connection with our share buyback program, at a cost of
R$337.1 million in 2002, and R$246.7 million in 2001.  In 2002, a portion of
the common shares and preferred shares purchased by us were acquired by us
pursuant to put options sold by us in 2001 in connection with our share buyback
program.  We plan to continue to purchase our common shares and preferred
shares during 2003 through our share buyback program.



                                      106


<PAGE>
AMBEV'S MAJOR SHAREHOLDERS

      The following table sets forth information, as of June 16, 2003 with
respect to any person known to AmBev to be the beneficial owner of 5% or more
of AmBev's outstanding shares:

<TABLE>
<CAPTION>
                                                           AMOUNT AND PERCENTAGEAMOUNT AND PERCENTAGE
                                                             OF COMMON SHARES    OF PREFERRED SHARES
                                                        ------------------------      ------------------------
<S>                                                     <C>               <C>         <C>              <C>
The Bank of New York - ADR Department(1).......            11,633,900      0.07%      9,134,451,700    40.06%
Braco(2).......................................         3,326,130,215     21.14%
ECAP(3)........................................         4,039,568,225     25.67%
FAHZ(4)........................................         3,794,204,726     24.11%        463,032,513     2.03%
S-Braco(5).....................................           888,214,820      5.64%
Caixa da Previdencia dos Funcionarios do
  Banco Central do Brasil - PREVI..............            73,340,770      0.47%      3,506,166,855    15.38%
Fundacao Banco Central Previdencia Privada-
  Centrus......................................           853,197,735      5.42%             -            -
Marcel Herrmann Telles(6) .....................                     *          *        213,145,000     0.93%
Jorge Paulo Lemann(7)..........................                     *          *             *            *
Carlos A. Sicupira(8)..........................                     *          *             *            *
</TABLE>
-------------------

(1)   Represents the number of shares held in the form of ADSs. The Bank of
      New York is the depositary of AmBev shares in accordance with the
      deposit agreement entered into with AmBev and the owners of AmBev ADSs.

(2)   Does not include shares owned by ECAP or S-Braco. Braco owns 99.74% of
      the voting shares of ECAP. Mr. Telles, a Co-Chairman of the Board of
      Directors of AmBev and a counselor of the FAHZ, Mr. Lemann and Mr.
      Sicupira, each a member of the Board of Directors of AmBev, own
      indirectly 25.0%, 50.0% and 25.0%, respectively, of the voting capital
      of S-Braco, which, in turn, owns 84.55% of the voting capital of Braco.

(3)   Does not include shares owned by Braco or S-Braco. Braco owns 99.74% of
      the voting shares of ECAP. Mr. Telles, a Co-Chairman of the Board of
      Directors of AmBev and a counselor of the FAHZ, Mr. Lemann and Mr.
      Sicupira, each a member of the Board of Directors of AmBev, own
      indirectly 25.0%, 50.0% and 25.0%, respectively, of the voting capital
      of S-Braco, which, in turn, owns 84.55% of the voting capital of Braco.

(4)   Mr. Telles, Victorio Carlos De Marchi, Jose Heitor Attilio Gracioso,
      Roberto Herbster Gusmao and Jose de Maio Pereira da Silva, directors of
      AmBev, and Jose Adilson Miguel, an officer of AmBev, are counselors of
      the FAHZ.

(5)   Does not include shares owned by Braco or ECAP. Braco owns 99.74% of the
      voting shares of ECAP. Mr. Telles, a Co-Chairman of the Board of
      Directors of AmBev and a counselor of the FAHZ, Mr. Lemann and Mr.
      Sicupira, each a member of the Board of Directors of AmBev, own
      indirectly 25.0%, 50.0% and 25.0%, respectively, of the voting capital
      of S-Braco, which, in turn, owns 84.55% of the voting capital of Braco.

(6)   Does not include 7,365,698,440 common shares owned by Braco and ECAP,
      and 888,214,820 shares owned by S-Braco. Mr. Telles owns indirectly
      25.0% of the voting capital of S-Braco, which, in turn, owns 84.55% of
      the voting capital of Braco, which, in turn, owns 99.74% of the voting
      shares of ECAP, and is also an intervening party to the AmBev
      shareholders' agreement.

(7)   Does not include 7,365,698,440 common shares owned by Braco and ECAP,
      and 888,214,820 shares owned by S-Braco. Mr. Lemann owns indirectly
      50.0% of the voting capital of S-Braco, which, in turn, owns 84.55% of
      the voting capital of Braco, which, in turn, owns 99.74% of the voting
      shares of ECAP, and is also an intervening party to the AmBev
      shareholders' agreement.

(8)   Does not include 7,365,698,440 common shares owned by Braco and ECAP,
      and 888,214,820 shares owned by S-Braco. Mr. Sicupira owns indirectly
      25.0% of the voting capital of S-Braco, which, in turn, owns 84.55% of
      the voting capital of Braco, which, in turn, owns 99.74% of the voting
      shares of ECAP, and is also an intervening party to the AmBev
      shareholders' agreement.

      For a description of the Company's major shareholders' voting rights, see
"AmBev Shareholders Agreement".

                                     107

<PAGE>

      OPTIONS AND WARRANTS

      On February 14, 1996, Brahma's Board of Directors approved the private
placement of 404,930,519 warrants at R$50 per 1,000-share lot, exercisable on a
one-to-five basis (already adjusted for the stock split that occurred in 2000)
during the month of April 2003 at a strike price of R$1,000.00 per one thousand
common or preferred shares (the right of each warrant to subscribe for shares
would be adjusted proportionately should there be any splits, reverse splits or
distributions of stock dividends). Each warrant was originally issued to
holders of a block of 17 shares of Brahma, whether preferred or common. The
subscription price for each of the warrants was adjusted pursuant to the IGP-M
inflation index, reduced by dividends paid and accrued interest at the rate of
12% per year. At the Brahma shareholders' meeting that considered the Brahma
conversion, common shareholders voted to cancel the Brahma warrants and replace
them with new AmBev warrants, which entitled holders to subscribe for AmBev
shares in accordance with the original terms and conditions applicable to the
Brahma warrants. The 404,930,519 warrants entitled holders to subscribe for a
total of 710,195,105 newly issued common shares and 1,314,457,490 newly issued
preferred shares of AmBev.

      The criteria to be used in the calculation of the strike price of the
warrants is being disputed by a number of holders of warrants in the courts of
Sao Paulo and Rio de Janeiro. See "Financial Information-Consolidated
Financial Statements and Other Information-Legal Proceedings-Options and
Warrants."

AMBEV'S SHAREHOLDERS AGREEMENT

      On July 1, 1999, the FAHZ, Braco and ECAP, as well as AmBev and Messrs.
Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira, the latter three
as intervening parties, entered into a shareholders agreement with respect to
the voting of shares of AmBev and the voting by AmBev of the shares of its
subsidiaries (including Brahma and Antarctica), among other matters.

      MANAGEMENT OF AMBEV.

      Although each common share of AmBev entitles shareholders to one vote in
connection with the election of AmBev's Board of Directors, AmBev's controlling
shareholders, the FAHZ, Braco and ECAP, have the ability to elect the majority
of AmBev's directors. Because the election of any director by minority (non-
controlling) shareholders would require, under Law 6,404/76, the adoption of a
cumulative vote procedure, the provisions of the shareholders' agreement on the
management of AmBev were based on the assumption that no directors will be
elected by minority shareholders of AmBev.

      Due to recent changes introduced by Law No. 10,303/01, minority
shareholders holding at least 15% of voting capital and preferred shareholders
holding at least 10% of total capital may elect one member of the Board of
Directors and its alternate member. Additionally, if minority shareholders do
not achieve such percentage, they can jointly appoint one member of the Board
of Directors and its alternate member once they represent, together, at least
10% of total capital. In order to exercise these rights, any of these
shareholders should prove that it has held the shares for at least three
months.

      If such prerogative is exercised with the adoption of a cumulative voting
procedure, the controlling shareholder would always have the right to elect the
same number of members plus one, independently of the number of directors.

      Additionally, until the 2005 annual shareholders meeting, the director
appointed by preferred shareholders (individually or cumulatively) shall be
selected from a three-name list previously prepared by the controlling
shareholder.

                                     108

<PAGE>

      Under the shareholders' agreement, each of the FAHZ, Braco and ECAP will
have representation on the Board of Directors of AmBev and its subsidiaries.
The boards of directors of AmBev and its subsidiaries will each be comprised of
at least three and no more than 15 regular members and no more than 15
alternates, with a term of office of three years and reelection being
permitted. The FAHZ will have the right to appoint four directors and their
respective alternates to the boards of directors of AmBev and of its
subsidiaries, so long as it maintains at least a minimum ownership of AmBev
voting shares equivalent to the ownership of common shares that the FAHZ held
at the time that the shareholders' agreement was entered into. At the time that
the shareholders' agreement was entered into, the FAHZ held 459,521,728 common
shares, which adjusted for the five-for-one stock split that took effect on
October 23, 2000 and is currently equivalent to 2,297,608,640 common shares.
The FAHZ is not allowed under the shareholders' agreement to appoint more than
four directors in the event that its holding of AmBev common shares increases.
The shareholders' agreement also does not provide for a proportional reduction
in the number of directors appointed by the FAHZ, in case of reduction in the
number of AmBev common shares that it owns. As a result, any reduction in the
holding of the FAHZ below 2,297,608,640 AmBev common shares would cause it to
lose the right to appoint any director of AmBev. Braco and ECAP, acting
jointly, have the right to appoint members and their respective alternates to
the boards of directors of AmBev and its subsidiaries, in a number
proportionate to the number of members appointed by the FAHZ. Such proportion
is based on the ratio between the FAHZ's holding and the aggregate holdings of
Braco and ECAP in the voting capital of AmBev.

      The shareholders' agreement provides that AmBev will have two Co-Chairmen
with identical rights and duties, one appointed by the FAHZ and the other by
Braco and ECAP, jointly. In the event of a deadlock, neither of the Co-Chairmen
has a deciding vote on matters submitted to the Board of Directors of AmBev.

      Each of the FAHZ, or Braco and ECAP together, may remove a director that
it has appointed to the Board of Directors of AmBev or its subsidiaries, and
each also has the right to appoint the respective replacement or a new
alternate, if the originally appointed alternate is confirmed for the vacant
position.

      Each of the FAHZ, Braco and ECAP has agreed to exercise its voting rights
in the shareholders' meetings of AmBev and its subsidiaries in such a way that
it may elect the largest possible number of directors in each of AmBev and its
subsidiaries. The FAHZ, Braco and ECAP will agree on the method of casting
their votes in order to accomplish this purpose in the event of adoption of
cumulative vote procedure under Brazilian law, under which each common share is
entitled to as many votes as there are directors to be elected.

      The shareholders' agreement provides that AmBev will have one Chief
Executive Officer (Diretor Geral) and Officers (Diretores Adjuntos), to be
elected by AmBev's Board of Directors.

      PRELIMINARY MEETINGS AND EXERCISE OF VOTING RIGHTS.

      On matters submitted to a vote of the shareholders or their
representatives in the boards of directors of AmBev or its subsidiaries, the
FAHZ, Braco and ECAP have agreed to endeavor first to reach a consensus with
respect to voting their common shares of each of AmBev and its subsidiaries,
and as to how to direct their representatives to vote on the matter being
submitted. Law No. 10,303/01 recognizes the shareholders agreement as the
appropriate instrument to determine how power should be exercised by the
controlling shareholders. In order to reach such a consensus, the shareholders'
agreement provides that the parties shall hold a preliminary meeting in advance
of all meetings of shareholders or boards of directors of AmBev or of its
subsidiaries, with the purpose of discussing and determining a consensus
position to be taken by the parties in such meetings. This procedure makes it
more likely that a matter approved by the controlling shareholders will also be
approved at a shareholders' meeting.

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      If the parties fail to reach a consensus with respect to a particular
matter, the position to be adopted by all parties to the agreement will be
determined by the group holding the greatest number of AmBev voting common
shares, which currently is Braco and ECAP. However, this rule does not apply in
connection with the election of members of boards of directors, as described
above under

      "-Management of AmBev", and with respect to fundamental matters which
require unanimous approval by the FAHZ, Braco and ECAP, as follows:

      o     any amendment to the by-laws of AmBev and/or any of its
            subsidiaries changing the corporate objectives, the term of
            duration of the company, and/or the composition, powers and duties
            of the management bodies;

      o     approval of the annual investment budget of AmBev and/or any of
            its subsidiaries;

      o     approval of AmBev's strategic five-year plan;

      o     appointment, removal or replacement of the Chief Executive Officer
            of AmBev;

      o     approval or change of the compensation policy for the Board of
            Directors and officers of AmBev and its subsidiaries;

      o     approval of stock option plans for the managers and employees of
            AmBev and/or its subsidiaries;

      o     change in the dividend policy of AmBev and/or any of its
            subsidiaries;

      o     increases in the capital of AmBev and/or any of its subsidiaries,
            with or without preemptive rights, through subscription, creation
            of a new class of shares, or changes in the characteristics of the
            existing shares, as well as decreases of capital, issuances of
            debentures (whether or not convertible into shares), warrants, and
            the creation of founders' shares by AmBev and/or any of its
            subsidiaries;

      o     mergers, spin-offs, transformations, acquisitions, and investments
            involving AmBev and/or any of its subsidiaries;

      o     the creation, acquisition, assignment, transfer, establishment of
            an encumbrance on and/or disposal of, shares, quotas and/or any
            securities issued by any of AmBev's subsidiaries, under any title
            or form;

      o     the incurrence by AmBev and/or any of its subsidiaries, in a
            single transaction or series of related transactions, of any
            indebtedness greater than 10% of the shareholders' equity of AmBev
            as per the last audited balance sheet prepared in accordance with
            Brazilian GAAP;

      o     the execution, amendment, termination, renewal or cancellation of
            any contracts, agreements or the like involving the registered or
            deposited trademarks of AmBev or its subsidiaries;

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      o     the extension of loans or the offer of guarantees of any kind by
            AmBev and/or any of its Subsidiaries to any third parties in an
            amount greater than 1% of AmBev's shareholders' equity as set
            forth in the last audited balance sheet prepared in accordance
            with Brazilian GAAP, except in favor of employees of AmBev and of
            its subsidiaries, or in favor of the subsidiaries themselves;

      o     election of members for committees of AmBev's Board of Directors;

      o     cancellation of the registration of AmBev and/or any of its
            subsidiaries as publicly traded companies;

      o     petition for an arrangement with creditors (concordata) or
            acknowledgment of bankruptcy by AmBev and/or any of its
            subsidiaries;

      o     liquidation or dissolution of AmBev and/or any of its
            subsidiaries; and

      o     appointment of the external auditors of AmBev and/or any of its
            subsidiaries.

      The shareholders' agreement provides that whenever the parties fail to
reach a consensus in a preliminary meeting as to any matter listed above, they
will exercise their voting rights so as not to approve such matter. The
shareholders' agreement provides that any votes cast by the FAHZ, Braco or ECAP
in violation of the provisions of the agreement will be deemed null, void and
ineffective.

      RIGHTS OF FIRST REFUSAL.

      The shareholders' agreement contains the following provisions concerning
rights of first refusal of the parties to the agreement:

      o     Neither the FAHZ, on the one hand, nor Braco and ECAP, on the
            other hand, may directly or indirectly dispose of their AmBev
            shares without offering a right of first refusal to the other
            party. The right of first refusal can only be exercised so that
            all AmBev shares offered are acquired by the offered party and so
            that such acquisition occurs within a 30-day period, as provided
            in the shareholders' agreement. If the right of first refusal is
            not exercised, the party wishing to dispose of its AmBev shares
            may do so within 60 days, provided that the disposition is made on
            the same terms and at no less than the same price as offered to
            the other party;

      o     In the event that the shares of AmBev owned by the FAHZ as one
            party, and Braco and ECAP as the other party, become subject to
            seizure, attachment, judicial surety or any other restrictive
            measure, and such restriction is not removed or waived within 30
            days after its imposition, the shares subject to the restriction
            shall be automatically deemed offered for sale to the other party.
            This offer will remain open for 30 days, and the price for the
            AmBev shares will be the lesser of either the book value of the
            AmBev shares, as per the latest audited balance sheet of AmBev,
            prepared in accordance with Brazilian GAAP, or the average quoted
            market price of the AmBev shares on stock exchanges in the 20 days
            prior to the removal or waiver of the imposition. If the
            obligations guaranteed by the restriction exceed the above price,
            the party whose shares have been subject to the restriction will
            be liable for the difference that the other party may be required
            to deposit in order to acquire the shares;

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      o     If any of the FAHZ, as one party, and Braco and ECAP, together as
            the other party, intends to dispose of subscription rights
            corresponding to AmBev shares that it holds, it must first offer
            such rights to the other party, who will then be required to
            exercise its right of first refusal to subscribe the new shares to
            be issued, within 10 days; and

      o     In the event of a proposed sale by Marcel Telles, Jorge Paulo
            Lemann or Carlos Alberto Sicupira of any voting shares of Braco or
            any voting shares of ECAP held by Braco, which would result in a
            change in control of either Braco or ECAP, the FAHZ will have a
            right of first refusal to acquire all shares of Braco to be
            disposed of by the above Braco shareholders, or all shares of ECAP
            to be disposed of by Braco. The FAHZ will have 30 days to exercise
            this right of first refusal.

      The shareholders' agreement provides that any transfer of shares or
subscription rights in which the provisions on rights of first refusal are not
observed will not be valid. AmBev's management is also prohibited from
reflecting any such transfer in the company's corporate books and recent
changes introduced by Law No. 10,303/01 confirms the applicability of the
shareholders' agreement in such cases.

      BUY-SELL RIGHTS.

      The shareholders' agreement provides for buy-sell rights beginning 30
months after the date of execution of the agreement. The buy-sell provisions
create an obligation of either party to sell their AmBev shares or purchase the
AmBev shares of the other party, as the case may be. This two-way obligation
operates as follows:

      o     a party disagreeing on any matter with the other party has the
            right to notify the other party, and to state that it intends to
            purchase all the shares of the other party. In the notice, the
            dissenting party must state (a) the price per share to be paid,
            (b) the payment conditions, (c) the period for consummating the
            transaction, which cannot exceed 30 days, (d) the interest rate,
            and (e) the applicable inflation adjustment index. The dissenting
            party can establish all these conditions at its own discretion;

      o     the other party that receives the notice then has the option of
            (a) accepting the offer or (b) purchasing all the shares of the
            dissenting party on the same terms and conditions as notified by
            the dissenting party. The dissenting party will then have to
            accept whatever decision is made by the other party.

      The only exception to the compulsory purchase or sale of AmBev shares
under this provision relates to non-completion of the share transfers within
six months due to the need of the FAHZ to obtain necessary approvals, since the
FAHZ is subject to a number of formalities and restrictions on the ability to
sell assets, which are due to its corporate nature. In such a case, the parties
will submit the disagreement to arbitration, to be conducted in accordance with
the rules of the International Chamber of Commerce - ICC. Except when otherwise
agreed by the dissenting party, the price of the AmBev shares must be payable
in no more than 12 monthly installments.

      SPECIFIC PERFORMANCE.

      Due to recent changes introduced by Law No. 10,303/01, the obligations of
the parties under the shareholders' agreement will be subject not only to
specific performance, as provided under Law No. 6,404/76, but will also bind
third parties to the terms of the shareholders' agreement, in effect declaring
null and void any action taken in its contravention so long as rights and
obligations of third parties stem from the shareholders' agreement.

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SHAREHOLDERS' VOTING RIGHTS AGREEMENT

      As of August 30, 2002, Santa Judith, Santa Irene, Santa Estela and Santa
Prudencia (collectively the Santas), with Mr. Lemann, Mr. Sicupira and Mr.
Telles, as intervening parties, entered into a shareholders' voting rights
agreement (the "Shareholders' Voting Rights Agreement") with respect to Mr.
Lemann's, Mr. Sicupira's and Mr. Telles' respective indirect interests in each
of S-Braco, Braco, ECAP and AmBev. In the Shareholders' Voting Rights
Agreement, each of the Santas (and Mr. Lemann, Mr. Sicupira and Mr. Telles)
agreed to exercise their respective influence in S-Braco, Braco, ECAP and AmBev
in full compliance with the terms of the Shareholder's Voting Rights Agreement.
The Santas agreed that the board of Directors of S-Braco shall consist of four
members and that the executive committees of Braco and ECAP shall consist of
two members to four members, respectively. Each block of voting shares
representing 25% of the voting shares of S-Braco shall entitle its owner(s), at
all times, to designate (i) one member of the Board of Directors of S-Braco,
(ii) one member of the executive committees of Braco and ECAP, respectively,
and (iii) one member of the Board of Directors of AmBev and the respective
alternate member (or such higher number of individuals as proves necessary to
maintain control over AmBev's Board of Directors, alone or in conjunction with
Fundacao, pursuant to the AmBev Shareholder's Agreement). The Santas
further agreed that resolutions concerning S-Braco, Braco, ECAP and AmBev
relating to certain issues may only be approved by prior unanimous vote of the
Santas. On the other issues not requiring unanimity, Mr. Lemann, Mr. Sicupira
and Mr. Telles, as the controlling shareholders of the Santas, shall in turn,
have a binding personal casting vote to resolve any deadlock with respect to
such issues. The Shareholder's Voting Rights Agreement also contains, among
others, terms and conditions (a) restricting vehicles by which Mr. Lemann, Mr.
Sicupira and Mr. Telles, and their respective direct descendants can hold
shares of S-Braco, Braco, ECAP and AmBev and (b) prohibiting the pledging of
shares of S-Braco, Braco, ECAP and AmBev by any of the Santas as security for
the obligations of third parties which could result in the potential transfer
of ownership or control of such shares.

      Additionally, Santa Judith, Santa Irene, Santa Estela and Santa
Prudencia, as well as Mr. Lemann, Mr. Sicupira and Mr. Telles, the latter
three as intervening parties, are parties to a shareholders' property rights
agreement relating to the disposition of shares of S-Braco.

AMBEV SHARE TRANSFER AGREEMENT AND AMBEV GOVERNANCE AGREEMENT

      Pursuant to the stock purchase agreement dated May 1, 2002 (as amended,
the "Stock Purchase Agreement"), between AmBev and BAC, for the purchase by
AmBev of 230,920,000 Class A common shares, without par value, of Quinsa, on
January 31, 2003, Fundacao, Braco and ECAP, as well as AmBev and BAC
entered into (i) a share transfer agreement related to the capital stock of
AmBev (the "AmBev Share Transfer Agreement") and (ii) a governance agreement
related to the governance of AmBev (the "AmBev Governance Agreement"). The
AmBev Share Transfer Agreement and the AmBev Governance Agreement will not
become effective until shares of AmBev are acquired by BAC.

      Pursuant to the AmBev Share Transfer Agreement, among other things, (i)
BAC has agreed not to Transfer any common shares of AmBev held by BAC, except
for Transfers to affiliates or family members ("Permitted Transferees"), other
than in accordance with the provisions of the AmBev Shareholders Agreement,
(ii) BAC and its Permitted Transferees have granted Braco and ECAP a right of
first refusal on any transfer of common shares of AmBev to third parties,
pursuant to which BAC will not Transfer any common shares of AmBev (except to
Permitted Transferees) unless BAC or its Permitted Transferees shall have first
offered to sell such common shares of AmBev to Braco and ECAP, (iii) Braco and
ECAP have granted BAC and its Permitted Transferees tag-along rights pursuant
to which BAC and its Permitted Transferees have the right to sell at the same
price and on the same terms and conditions as Braco and ECAP in connection with
any sale by Braco and ECAP of more than 50% of the AmBev shares held by Braco
and ECAP to a third person or any sale of a majority of the outstanding shares
of Braco and ECAP,

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(iv) BAC and its Permitted Transferees have granted Braco and/or ECAP
drag-along rights pursuant to which in the event that Braco or ECAP propose to
sell in a bona fide arm's-length sale more than 50% of their common shares of
AmBev to any unaffiliated third party, Braco and ECAP have the right to
require BAC and its Permitted Transferees to sell to the proposed transferee
all or a portion of their common shares of AmBev for the same per share
consideration, in the same pro rata portion and on the same terms and
conditions as proposed to be received by Braco and ECAP, and (v) AmBev has
granted to BAC and its Permitted Transferees the preemptive rights set forth
in Article 171 of the Brazilian corporation law. Pursuant to the AmBev
Governance Agreement, among other things, (i) BAC and its Permitted
Transferees have the right to nominate a number of directors of AmBev
proportionate to their percentage ownership of the total outstanding common
shares of AmBev, provided that BAC and its Permitted Transferees have the
right to nominate at least one director as long as BAC and its Permitted
Transferees continue to own at least 90% of the common shares of AmBev
acquired by them pursuant to the options under the Stock Purchase Agreement
and (ii) for so long as BAC and its Permitted Transferees have at least 90% of
the shares of AmBev acquired pursuant to the consummation of the options,
certain matters will not be approved by the shareholders meeting or the board
of directors of AmBev without the vote of BAC.


                          RELATED PARTY TRANSACTIONS

MATERIAL RELATED PARTY TRANSACTIONS

      We engage in the purchase and sale of raw material with affiliated
entities, which are eliminated on consolidation in our financial statements,
with the exception of entities under common control (which are proportionally
consolidated), as described in note 2 (b) to our financial statements.

      AmBev has entered into an agreement with the FAHZ for the purchase of
certain labels for the beer packaging. The FAHZ, as described in "Operating and
Financial Review and Prospects-Critical Accounting policies", provides medical,
dental and social assistance to current and former employees and their
dependents. The FAHZ owned 23.3% of AmBev's voting shares and 10.7% of our
total shares on December 31, 2002. The FAHZ is not consolidated in our
Brazilian GAAP financial statements. During the year ended December 31, 2002,
we purchased labels on an arms-length basis with a value of R$28.4 million from
the FAHZ.

      The Company finances its employees' purchases of shares pursuant to
AmBev's stock ownership plan. See "Directors, Senior Management and
Employees-Plans-Stock Ownership Plan".

      We have entered into a variety of agreements with Quinsa and BAC,
Quinsa's controlling shareholder, relating to the acquisition of our interest
in Quinsa. See "Information of the Company-Acquisition of Interest in Quinsa".

      Between June 6, 2003 and June 16, 2003, we acquired from Mr. Marcel
Herrmann Telles, a director of AmBev and a member of our controlling group,
156,875,520 preferred shares held directly by him which had been subscribed by
Mr. Telles upon exercise of certain rights to acquire shares granted to him
under the stock ownership plan. Pursuant to the stock ownership plan, if the
holder is going to sell the shares more than 60 months after the shares are
acquired by the employee, we have the right to buy the preferred shares issued
thereunder at market price. Mr. Telles sold his 156,875,520 preferred shares to
us more than 60 months after he acquired the shares, for which we paid R$93.4
million, which was the market price of the shares calculated pursuant to the
terms of the stock ownership plan.


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INTERCOMPANY LOANS

      We have entered into intercompany loan agreements with affiliated
entities that have undetermined maturity dates and are subject to arms-length
financial and interest charges. These loans are eliminated on a consolidated
basis, as described in note 2 (b) to our financial statements.

Financial Information


      CONSOLIDATED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS

      See "Financial Statements" and pages F-1 through F-115.

LEGAL PROCEEDINGS

      Except as set forth below, there are no legal proceedings to which we are
party, or to which any of our properties are subject which, either individually
or in the aggregate, may have a material adverse effect on our results of
operations, liquidity or financial condition. For further details, see note 9
of our consolidated financial statements.

      CIVIL CLAIMS.

      As of March 31st, 2003, we had 3,868 civil claims pending, including
distributors and product related claims. We are the plaintiff in 1,475 and the
defendant  in 2,393 of these claims, respectively. We have established
provisions in the amount of R$56.0 million as of April 30, 2003, in connection
with civil claims in which we believe there is a probable chance of loss.

      On December 2, 2002 a court in the State of Rio Grande do Sul prohibited
the sale of Kronenbier in that state. On the grounds that that the beer could
not be classified as a non-alcoholic beverage because it has a 0.34% alcoholic
level. We have appealed against this ruling and expect to modify the decision
in the superior courts based on expert reports and the Agriculture Ministry
resolutions on this matter. The lawsuit aims to suspend the sale of the beer
only. However there is a similar lawsuit in the state of Parana, pending a
court decision, in which damages and the reimbursement of the revenues from the
Kronenbier sales in Parana are demanded. We also believe that our views will
prevail in this matter and therefore we have not made a provision for any
amount.

      On April 11, 2003 the Department of Justice filed a suit questioning the
use of advertising that could potentially induce teenagers and children to
consume alcoholic beverages in a Skol beer campaign. On April 2, 2002 the
courts ruled in our favor in a similar proceeding regarding Brahma advertising.
The court ruled that the advertising campaign caused no harm and did not
influence teenagers and children consumption of alcoholic beverages. We are
negotiating a settlement with the Department of Justice and believe that the
proceeding will end without any material disbursement on our part. Therefore,
we have not made a provision for any amount in connection with this proceeding.

      On February 29, 2000, five former shareholders of Antarctica who had
exercised appraisal rights under the Antarctica conversion jointly filed a
lawsuit against us and Antarctica in the 18th Civil Court of the City of Sao
Paulo. These former shareholders claim that the decision taken at the
Antarctica shareholders' meeting held on September 2, 1999 changing the
valuation method for determining the value of the Antarctica shares subject to
appraisal rights from the book value to economic value of such shares was
invalid, because it occurred after the plaintiffs had exercised their appraisal
rights. These plaintiffs claim compensation in the total amount of
approximately R$0.8 million (the current debt amount

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is R$1.1 million). On July 21, 2001, the court dismissed the action against
Antarctica. On December 21, 2001 the judge adjudicated in favor of the
minority shareholders requiring us to pay the difference between the value of
the shares. We have appealed from this ruling and expect to prevail in the
court of appeals based upon advice from our external counsel. Based upon this
expectation, we have not made a provision for any amount.

      OPTIONS AND WARRANTS

      In 2002, considering that some of AmBev's warrants holders (see "Major
Shareholders-Options and Warrants") had manifested an opinion concerning the
criteria to be used in the calculation of the exercise price of AmBev's
warrants which did not conform to the Company's understanding, the Company
decided to request a ruling from the CVM in order to decide the matter.

      On April 17, 2003, CVM issued its final opinion regarding this matter,
ruling that the Company's criteria to calculate such exercise price was
correct. Since some of those warrant holders, did not agree with CVM's final
decision, they filed several lawsuits before the Courts of Sao Paulo and Rio
de Janeiro in order to revert CVM's decision.

      These warrant holders contend that the exercise price should be adjusted
(and reduced) by taking into account the strike price of certain rights granted
by AmBev to its officers and employees since 1996 to acquire shares of AmBev,
as well as for the exercise price of other stock purchase warrants issued in
1993.

      In such lawsuits the warrant holders requested interim injunctions in
order to determine: (1) the immediate issue by us of the shares corresponding
to the total amount of warrants held by the plaintiffs; and (2) the right to
subscribe for these shares at the subscription price at substantially lower
price, as described above.

      In most of the cases the lower courts have granted preliminary
injunctions to the plaintiffs. AmBev filed preliminary appeals in each of said
cases to the Court of Appeals, requesting the temporary suspension of the
effects of the decisions of the lower courts. The Court of Appeals, so far, has
granted us the requested suspension in all the cases.

      Based on advice from our external counsel, we believe that we have a good
chance of prevailing in these proceedings. Because the dispute is based on
whether the Company should receive as a subscription price a lower price or the
price that the Company considers adequate, without any contingent liability
(except for legal fees), a provision of amounts with respect to these
proceedings is not applicable.

      Currently, we have been notified of six proceedings and 11 holders
claiming such rights and we estimate that the aggregate subscription price of
all the shares would be, based on criteria we understand is adequate, R$1,022.4
million based on a strike price of R$0.90977 for preferred shares and R$0.91595
for voting shares. One of the warrant holders argues that the strike price
thereof should be R$ 0.13581. The maximum dilution for the existing
shareholders would be, therefore, the difference between these values.

      TAX MATTERS.

      AmBev has filed claims against the Brazilian tax authorities alleging
that certain taxes are unconstitutional. These legal tax proceedings include
claims for income taxes, the value-added tax (ICMS), the excise tax (IPI) and
revenue taxes (PIS and COFINS). As these claims are contingent on obtaining
favorable judicial decisions, the corresponding assets which might arise in the
future are only recorded once it becomes certain that we will receive the
amounts previously paid or deposited.

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      As of March 31st, 2003, we had approximately 1,273 tax claims pending,
including judicial proceedings and administrative investigations. Most of these
claims relate to ICMS and IPI. We have made provisions of R$717.7 million, in
connection with these tax proceedings for which we believe there is a probable
chance of loss.

      INCOME TAX AND SOCIAL CONTRIBUTION.

      Beginning in 1997, an amendment to the tax law confirmed the
deductibility of interest attributable to shareholders' equity for social
contribution and income tax purposes. Brahma filed a lawsuit with the 22nd
Federal Court of Rio de Janeiro, requesting recovery of social contribution
taxes previously paid for the 1996 fiscal year in the amount of R$20.1 million.
The Federal Court granted Brahma an injunction recognizing the deductibility of
payment of interest attributable to shareholders' equity and, as a result,
allowing Brahma to suspend the payment of social contribution amounts owed in
1999 up to the amount not deducted in 1996, thereby allowing Brahma to offset
the amounts of taxes unduly paid in 1996 against the amounts owed in 1999. In
April 2001, the Federal Court of Appeals reversed the Federal Court's
injunction. On April 3, 2002, we appealed the Federal Court of Appeal's
judgment to the Brazilian Supreme Court and to the Superior Court of Justice.

      VALUE-ADDED TAX, EXCISE TAX AND TAXES ON NET SALES.

      In October 1996, a tax law allowed credits of ICMS on capital
expenditures to be offset against the amounts payable on such tax. Based on
this law and on certain constitutional principles, some of our subsidiaries
filed several lawsuits with State Courts to allow them to offset ICMS tax paid
prior to 1996 and with IPI excise tax paid in the 1997 against similar taxes
payable in 1996. We made a provision regarding the amounts offset, including
the interest and penalties that could become payable should we lose these
lawsuits.

      During 1999, a new law came into effect requiring Brazilian companies to
pay PIS and COFINS not only on sales and services net sales, but also on
financial income. We have not been paying PIS and COFINS as required by the new
law, as we have obtained injunctions permitting the non-payment of these
additional taxes on the basis that the new law is unconstitutional. As such new
taxes remain in force until a final ruling is rendered, we recorded the
accumulated amount of R$216.9 million as "provisions for contingencies and
other" as of March 31st, 2003. We will not be permanently relieved of the
obligation to pay such taxes unless and until a final favorable ruling is
rendered. On December 1, 2002, Law No. 10,637 was enacted requiring PIS to be
levied as a 1.65% tax on revenues, calculated as the balance between 1.65% of
gross revenues less 1.65% of the sum of purchases of raw material, packaging
and equipment.

      Certain Brazilian taxpayers are prosecuting claims to be able to exclude
for the period from 1988 to 1995, in the calculation basis (i.e., the gross
revenue of the sixth previous month) the indexation for inflation prior to the
calculation of the PIS tax. The taxpayers argue that Complementary Law 7/70
does not require indexation of the calculation basis, and the provision in the
Decree-laws, which created indexation of the calculation basis, was overturned
by the Federal Supreme Court and the Senate. The tax authorities asserted that
the Federal Supreme Court and Senate actions affected only the determination of
the calculation basis, but did not affect the definition of the indexation
procedure in the Decree-Laws.

      On May 29, 2001 (ruling published on June 11, 2001) an arbitration
session of the Court of Appeals ruled in favor of the taxpayer. In the
administrative system, the decisions have been favorable to the taxpayers, and
the tax authorities are no longer issuing new infraction notices regarding this
issue. Although the issue has not yet received a final unappealable ruling, the
probability of the taxpayers' position not prevailing is considered to be
remote.

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      On October 15, 2001, we concluded the preliminary determination of the
credits arising in the five-year prescriptive period prior to the date of our
claim. The provision for the PIS liability, including interest and charges,
totaling R$138.7 million was reversed to income and recorded in "Value-added
and excise taxes on sales" during 2001 and we are currently awaiting a final
decision.

      DISTRIBUTORS AND PRODUCT-RELATED CLAIMS.

      Numerous breach of contract claims have been filed against CBB by former
distributors of Brahma and Antarctica whose contracts were terminated due to
low sales volume, failure by distributors to meet our guidelines and a general
rationalization of the distribution network. Most claims are still in the lower
level, in some we have appealed and are now in intermediate court levels, and a
few are currently being reviewed by the highest level Court of Appeals in
Brazil, the Supreme Court of Justice. Additionally, former Antarctica
distributors, among a few other distributors, filed breach of contract claims
against us. These distributors seek the revision of certain terms and
conditions of the distribution agreement or alleged breach by us.
Notwithstanding this, the agreements continue to be in full force and effect
and continue to be performed outside of any court proceedings.

      The aggregate amount of these claims is R$425.4 million. AmBev has made a
provision of R$19.1 million in regard to such claims as of March 31st, 2003,
based on advice of outside legal counsel. We intend to continue a program of
increasing our direct distribution and, in areas where we continue to use
third-party distributors, may terminate existing distributors in favor of new
distributors. We expect this program to result in additional lawsuits.

      There were currently 12 administrative proceedings against Brahma under
CADE's review, each of them commenced by former or present distributors who
challenge the legality of market practices of Brahma under distribution
arrangements and request the suspension of such market practices. CADE has
denied ten of these requests by determining that Brahma did not engage in any
of the alleged illegal activities. The remaining two proceedings are still
being analyzed by CADE.

      ANTITRUST MATTERS.

      We currently have five antitrust investigations pending against us, which
have been initiated by CADE following its investigations in connection with the
combination.

      The first proceeding, in the Amazonas state, concerns alleged tying
arrangements whereby we allegedly required our retailers to purchase certain of
our soft drink products in combination with their purchases of certain of our
beer products. Since April, 2001, such proceedings were submitted to CGSI
(Coordenacao-Geral de Analise de Infracoes nos Setores de
Sevico for investigation without any further actions from the antitrust
authorities.

      THE COMBINATION

      The second proceeding refers to some complaints brought by the Brazilian
Association of Antarctica Distributors (ABRADISA), alleging that provisions in
our distribution agreements are illegal exclusivity provisions. After
appropriate investigations, on February 22, 2002, the antitrust authorities
(SDE) decided to accept the proceedings against us in order to determine
whether there is circumstantial evidence relating to unfair market practices.
The antitrust authorities are seeking to determine whether or not the following
main practices are taking place:  (i) establishment of minimum quotas for
retailers to purchase our beverages; (ii) imposition of sale price to
retailers; (iii) whether the share of the distribution network among
Antarctica, Skol and Brahma products has resulted in damages to retailers' fair
competition; (iv) unjustified increase in price; and (v) unfair competition
between retailers and direct distribution. On March 29, 2002 we filed our
defense. Presently, we are awaiting for SDE's decision.

                                     118

<PAGE>




      In 2002, a distributor in the state of Alagoas filed a petition
requesting the Department of Justice to investigate the fulfillment of the
terms of CADE's performance agreement. The Department of Justice requested
information from AmBev on July 16, 2002. On August 12, 2002, we presented our
defense. We expect that the Department of Justice will withdraw the charges
with no further implication to AmBev. Based on the arguments presented before
the antitrust authorities on May 7 , 2003 and on advice received from outside
counsel, we believe that we have a good chance of being successful in these
proceedings. Therefore, we have not made a provision for any amount.

      The Department of Justice in the state of Rio Grande do Sul has filed two
proceedings in connection with the lay-offs of employees in the beer plants of
Estrela and Montenegro. We have entered into a settlement agreement with the
Department of Justice in the proceeding related to the Estrela plant, which has
been judicially confirmed. We are still discussing a settlement with the
Department of Justice in the Montenegro proceeding.

      According to applicable Brazilian antitrust legislation, fines of up to
30% of our gross revenue in the previous fiscal year may be levied upon the
company and, if they prove the personal liability of an officer, such officer
may be levied a fine of 10-50% of the fine applied to the company.

      JOINT VENTURES AND ALLIANCES

      Brahma's joint ventures with Miller and Unilever Brasil Ltda., its
franchise agreement with PepsiCo and Skol's licensing agreement with Carlsberg
were all required to be submitted to CADE for approval. See "-Joint Ventures
and Strategic Alliances". In October 1998, CADE approved the franchise
agreement with PepsiCo International, Inc. In early 1999, CADE approved
Brahma's joint venture with Unilever Brasil Ltda., which resulted in the
creation of Ice Tea do Brasil Ltda. Also in 1999, the Skol licensing
arrangement with Carlsberg was approved by CADE. Miller license arrangement was
approved in 1997.

      CADE is currently reviewing our cooperation with Souza Cruz S.A. for the
implementation of Cportal, a business-to-business website has yet to render its
decision. The cooperation with Souza Cruz S.A. for the implementation of
Agrega, a business-to-business website by means of which the acquisition of MRO
(materials, repairs and operation) products and services will be negotiated was
approved by CADE with no restrictions on November 28, 2001. The Agrega joint
venture was commenced on November 30, 2000.

      After PepsiCo's acquisition of Gatorade and subsequent licensing of the
trademark to us, CADE is analyzing the isotonic market concentration. On May 5,
2002, CADE rejected a solicitation by the antitrust authorities to suspend
effectiveness of such concentration (relating to production and distribution of
Gatorade), as a result of our license to maintain Gatorade's production centers
as well as independent marketing and commercial policies for each of Marathon
and Gatorade. On October 10, 2002, the antitrust authorities (SAE) provided
CADE with an opinion for the approval of the transaction with no restrictions,
which was followed by SDE on December 16, 2002 and CADE prosecutors on February
10, 2003. On May 8, 2003 one of the members of CADE's board issued a
preliminary opinion regarding the transaction. The preliminary opinion is that,
currently, the transaction is not harmful to the market and to the competitive
environment, given that Gatorade's market share has been declining and  the
market share of the natural isotonics has been increasing. The company has
agreed to keep all the labor positions related to Gatorade production, the
marketing policies for Gatorade and Marathon will be kept independently and the
company has agreed not to reveal the secrets regarding the production. We are
awaiting for CADE's final approval.

      CADE is currently reviewing our agreement with Quinsa to distribute
Quinsa beer in Brazil. We submitted the concentration act for CADE's approval
on February 21, 2003. On May 29, 2003, SDE


                                     119

<PAGE>




issued a technical opinion approving the transaction without restrictions.
This opinion is yet to be confirmed by CADE. The transaction is also subject
to the approval of Argentinean antitrust authorities. See "Information on the
Company-Joint Ventures and Strategic Alliances".

      LABOR MATTERS.

      We are involved in approximately 8,739 legal proceedings with former and
current employees, mainly relating to dismissals, severance, overtime, health
and safety premiums, supplementary retirement benefits and other matters, all
of which are awaiting judicial resolution. We have established provisions in
the amount of R$132.1 million as of March 31, 2003, in connection with all
labor proceedings in which we believe there is a probable chance of loss. In
Brazil, it is not unusual for a company to be a defendant in a large number of
labor claims. During 2003 we intend to enter into negotiations to try to settle
at least 1,500 of the pending proceedings in order to decrease the debt
resulting from probable losses in labor claims.

      In compliance with CADE's decision approving the controlling
shareholders' contribution and the performance agreement that we entered into
with CADE, any dismissals must be made in accordance with the restrictions
imposed by the decision. See "Background on the Company-Brazilian Antitrust
Approval". We are involved in some lawsuits filed by dismissed employees
claiming reinstatement in view of the CADE decision.

      ENVIRONMENTAL MATTERS.

      On November 7, 2001, the District Attorney of Manaus (Promotoria)
notified us that a criminal lawsuit had been initiated against IBANN, our
subsidiary, and three of its officers in the district court of the State of
Manaus claiming damages for harm allegedly done to the Igarape dos Franceses
forest. On March 21, 2002, the district attorney proposed a settlement through
a series of environmental projects. On November 19, 2002 we entered into an
agreement with the District Attorney which included the reforestation of an
area of the Igarape dos Franceses forest and the purchase of equipment used
by the governmental agencies to protect the environment. We have complied with
all the terms of the agreement which will be homologated at a judicial hearing
which has yet to be scheduled.

      On February 5, 2002, we entered into a performance agreement with the
Brazilian Department of Justice in order to promote the rehabilitation of "the
Fazenda Campos". Under this agreement we are supposed to clean and reforest
this area until the end of November, 2003. At that time, the Brazilian
Department of Justice will issue a legal opinion. We have already cleaned and
reforested the land, and currently we are just monitoring the growth of the
forest.


      In the first quarter of this year we proposed a draft of a performance
agreement establishing "Policies of Odors Emission" to the Brazilian Department
of Justice and Brazilian Environmental Authorities. Until June 16, 2003, no
legal opinion was issued by the Brazilian Department of Justice, or by the
Environmental Authorities.
      DIVIDEND POLICY

      For information regarding our dividend policy, see "Key
Information-Selected Financial Data-Dividends-Dividend Policy".

      SIGNIFICANT CHANGES

      Except as otherwise described in our annual financial statements, there
have been no significant changes in our business, financial conditions or
results since December 31, 2002.


                                     120

<PAGE>




The Offer and Listing


             PRINCIPAL MARKET AND TRADING MARKET PRICE INFORMATION

      AmBev is registered as a publicly held company with the CVM and has been
listed on the Brazilian stock exchanges since December 17, 1998, under the name
of Aditus Participacoes S.A. Because AmBev was originally incorporated as
a shelf company without any operational activity, there was no market for AmBev
shares until September 17, 1999, two business days after the Antarctica
conversion. From September 17, 1999 until September 15, 2000, the first date
following the Brahma conversion, there was a limited trading market for AmBev
shares. For a description of the combination transactions that led to the
formation of AmBev, including the Antarctica and Brahma conversions, see "The
Combination and Antitrust Approval". AmBev shares are quoted on the Sao
Paulo Stock Exchange under the symbols "AMBV3" (common shares) and "AMBV4"
(preferred shares). Until April 28, 2000, the AmBev shares were traded in the
Rio de Janeiro Stock Exchange and other Brazilian stock exchanges under the
symbols "AMBVON" (common shares) and "AMBVPN" (preferred shares).

      On October 20, 2000, the shareholders of AmBev present at an
extraordinary general meeting unanimously approved a five-for-one stock split
of the company's outstanding common and preferred shares. See note 15(a)(ii) in
the consolidated financial statements.

SHARES

      The table below shows the quoted high and low closing sales prices in
reais on the Sao Paulo Stock Exchange for AmBev's preferred and common
shares for the indicated periods. All prices quoted below relating to periods
prior to September 15, 2000, relate to high and low closing sales prices in
reais on the Sao Paulo Stock Exchange for preferred and common shares of
Brahma, AmBev's predecessor. All share prices, including prices relating to
Brahma preferred and common shares, have been restated to reflect AmBev's
five-for-one stock split described in the preceding paragraph.

     TRADING PRICES ON THE SaO PAULO STOCK EXCHANGE: PREFERRED SHARES(1)
     -------------------------------------------------------------------
                                                      PER 1000 PREFERRED SHARES
                                                      -------------------------
                                                               HIGH        LOW
                                                               ----        ---
                                                                  (in reais)
ANNUAL
---------------------------------------------------
2002                                                         R$550       R$391
2001...............................................            581         406
2000...............................................            488         208
1999...............................................            272          92
1998...............................................            176          78
1997...............................................            170         112
QUARTERLY
---------------------------------------------------
2002
First Quarter......................................          R$500       R$437
Second Quarter.....................................            497         398
Third Quarter......................................            460         391
Fourth Quarter.....................................            550         421
2001
First Quarter......................................          R$558       R$458
Second Quarter.....................................            581         476
Third Quarter......................................            535         415
Fourth Quarter.....................................            521         406

                                     121

<PAGE>

MONTHLY
-------------------------------------------------------------------------------

2001
December...........................................          R$515       R$467
2002
January............................................            500         465
February...........................................            479         454
March..............................................            483         445
April..............................................            488         450
May................................................            495         469
June...............................................            482         398
July...............................................            460         391
August.............................................            457         408
September..........................................            438         407
October............................................            533         421
November...........................................            505         506
December...........................................            550         526
---------------------
Source:  Bloomberg

(1)   For a period of time commencing on September 17, 1999, two business days
      after the Antarctica conversion, and prior to September 15, 2000, the
      first date following the Brahma conversion, there did exist two separate
      trading markets for the shares of AmBev and Brahma, AmBev's predecessor.
      Due to the limited trading volume in AmBev's shares throughout this
      period, however, this chart only relates to the stock prices of Brahma
      shares for the period of time commencing on September 17, 1999 and prior
      to September 15, 2000.


                                     122

<PAGE>

       TRADING PRICES ON THE SaO PAULO STOCK EXCHANGE: COMMON SHARES(1)
       ----------------------------------------------------------------
                                                               PER 1000
                                                                COMMON
                                                                SHARES
                                                              ------------
                                                              HIGH     LOW
                                                              ----     ---
                                                                (in reais)
ANNUAL
2002...................................................       R$489  R$355
2001...................................................         540    350
2000...................................................         470    158
1999...................................................         190     92
1998...................................................         160     77
1997...................................................         171    111

QUARTERLY
2002
First Quarter..........................................       R$445  R$385
Second Quarter.........................................         420    355
Third Quarter..........................................         410    360
Fourth Quarter.........................................         489    385
2001
First Quarter..........................................       R$540  R$415
Second Quarter.........................................         530    400
Third Quarter..........................................         535    350
Fourth Quarter.........................................         495    350

MONTHLY
2001
December...............................................       R$495  R$400
2002
January................................................         445    400
February...............................................         410    385
March..................................................         420    394
April..................................................         420    392
May....................................................         417    398
June...................................................         409    355
July...................................................         410    360
August.................................................         403    375
September..............................................         395    365
October................................................         469    385
November...............................................         483    437
December...............................................         489    465
------------------
Source:  Bloomberg

(1)   For a period of time commencing September 17, 1999, two business days
      after the Antarctica conversion, and prior to September 15, 2000, the
      first date following the Brahma conversion, two separate trading markets
      existed for the shares of AmBev and Brahma, AmBev's predecessor. Due to
      the limited trading volume in AmBev's shares throughout this period,
      however, this chart only relates to the stock prices of Brahma shares
      for the period of time commencing September 17, 1999 and prior to
      September 15, 2000.

ADRS

      AmBev has registered two classes of American Depositary Shares (ADSs)
pursuant to the Securities Exchange Act: ADSs evidenced by American Depositary
Receipts (ADRs) representing 100 preferred shares, and ADSs evidenced by ADRs
representing 100 common shares. The ADSs have been listed on the New York Stock
Exchange since September 15, 2000 and trade under the symbols "ABV.c" (ADSs
representing AmBev common shares) and "ABV" (ADSs representing AmBev preferred
shares). On October 20, 2000, the shareholders present at an extraordinary
general meeting unanimously approved a five-for-one stock split of the
company's outstanding common and preferred shares. However, AmBev's ADSs were
not split. Prior to the stock split, each ADS represented 20 common or
preferred shares

                                     123

<PAGE>



of AmBev. Since the stock split did not affect AmBev's ADSs, after the stock
split each ADS represented 100 common or preferred shares of AmBev.
Consequently, the stock split did not have a significant impact on the price
of our ADRs.

      As of May 30, 2003, there were 16 registered holders of our preferred
ADSs, with approximately 99.9% of the preferred ADSs registered in the name of
The Depository Trust Company. As of May 30, 2003, there were 12 registered
holders of the common ADSs, with approximately 99.9% of the ADSs registered in
the name of The Depository Trust Company.

      The information presented in the table below represents, for the
indicated periods, the reported high and low closing sales prices of AmBev ADRs
quoted in U.S. dollars on the New York Stock Exchange. All prices quoted below
relating to periods prior to September 15, 2000, relate to the reported high
and low closing sales prices of the ADRs of Brahma, AmBev's predecessor, quoted
in dollars on the New York Stock Exchange.


                                     124

<PAGE>

<TABLE>
<CAPTION>
     TRADING PRICES ON THE NEW YORK STOCK EXCHANGE: ADRS REPRESENTING 100 PREFERRED SHARES(1)
     ----------------------------------------------------------------------------------------
<S>                                                                <C>                    <C>
                                                                  PER 100 PREFERRED SHARE ADRS
                                                                --------------------------------
                                                                    HIGH                  LOW
                                                                    ----                  ---
                                                                            (in U.S.$)
ANNUAL
2002..........................................                  U.S.$21.49            U.S.$10.70
2001..........................................                       28.70                 14.20
2000..........................................                       25.50                 11.81
1999..........................................                       14.50                  7.00
1998..........................................                       15.56                  6.63
1997..........................................                       16.00                 10.87

QUARTERLY
2002
   First Quarter..............................                  U.S.$21.49            U.S.$18.30
   Second Quarter.............................                       21.30                 14.21
   Third Quarter..............................                       16.05                 10.72
   Fourth Quarter.............................                       15.56                 10.70
2001
   First Quarter..............................                  U.S.$28.70            U.S.$23.10
   Second Quarter.............................                       25.47                 19.27
   Third Quarter..............................                       23.17                 14.20
   Fourth Quarter.............................                       21.47                 14.45
2000
   First Quarter..............................                  U.S.$16.25            U.S.$12.13
   Second Quarter.............................                       17.00                 11.81
   Third Quarter prior to September 14, 2000..                       21.19                 17.00
   Third Quarter from September 17, 2000......                       22.13                 21.25
   Fourth Quarter                                                    25.50                 19.75

MONTHLY
2001
   December...................................                  U.S.$21.47            U.S.$19.70
2002
   December...................................                  U.S.$15.56            U.S.$13.69
2003
   January....................................                       16.61                 13.00
   February...................................                       14.42                 13.20
   March......................................                       16.61                 13.75
   April......................................                       19.99                 17.15
</TABLE>
-------------
Source:  Bloomberg

(1)   For a period of time commencing on September 17, 1999, two business days
      after the Antarctica conversion, and prior to September 15, 2000, the
      first date following the Brahma conversion, there did exist two separate
      trading markets for the shares of AmBev and Brahma, AmBev's predecessor.
      Due to the limited trading volume in AmBev's shares throughout this
      period, however, this chart only relates to the stock prices of Brahma
      shares for the period of time commencing on September 17, 1999 and prior
      to September 15, 2000.


                                     125


<PAGE>

<TABLE>
<CAPTION>
TRADING PRICES ON THE NEW YORK STOCK EXCHANGE: ADRS REPRESENTING 100 COMMON SHARES(1)
-------------------------------------------------------------------------------------
<S>                                                           <C>             <C>

                                                           PER 100 COMMON SHARE ADRS
                                                           -------------------------
                                                              HIGH            LOW
                                                              ----            ---
                                                                   (in U.S.$)
ANNUAL
2002...........................................          U.S.$18.75      U.S.$10.18
2001...........................................               26.00           10.00
2000...........................................               19.88            9.00
1999...........................................               10.25            7.31
1998...........................................               13.75            6.63
1997...........................................               16.00           10.50

QUARTERLY
2002
   First Quarter...............................          U.S.$18.75      U.S.$15.50
   Second Quarter..............................               17.50           14.00
   Third Quarter...............................               14.30           12.50
   Fourth Quarter..............................               13.50           10.18
2001
   First Quarter...............................          U.S.$26.00      U.S.$21.00
   Second Quarter..............................               22.26           18.00
   Third Quarter prior to September 14, 2000...               22.00           12.00
   Fourth Quarter..............................               16.60           10.00
2000
   First Quarter...............................          U.S.$10.19       U.S.$9.00
   Second Quarter..............................               12.13            9.69
   Third Quarter prior to September 14, 2000...               16.00           10.63
   Third Quarter from September 17, 2000.......               15.00           15.00
   Fourth Quarter..............................               19.88           14.50

MONTHLY
2001
   December....................................          U.S.$15.00      U.S.$12.00
2002
   December....................................          U.S.$13.00      U.S.$13.00
2003
   January.....................................               14.00           14.00
   February....................................               11.93           11.93
   March.......................................               11.93           11.93
   April.......................................               16.10           14.50
</TABLE>
--------------
Source:  Bloomberg

(1)   For a period of time commencing on September 17, 1999, two business days
      after the Antarctica conversion, and prior to September 15, 2000, the
      first date following the Brahma conversion, there did exist two separate
      trading markets for the shares of AmBev and Brahma, AmBev's predecessor.
      Due to the limited trading volume in AmBev's shares throughout this
      period, however, this chart only relates to the stock prices of Brahma
      shares for the period of time commencing on September 17, 1999 and prior
      to September 15, 2000.


                                     126

<PAGE>

                 REGULATION OF THE BRAZILIAN SECURITIES MARKET

      The Brazilian securities markets are regulated by the CVM, which has
general authority over the stock exchanges and securities markets, as well as
by the Central Bank, which has, among other powers, licensing authority over
brokerage firms and regulates foreign investment and foreign exchange
transactions. The Brazilian securities markets are governed by Law No.
10,198/01 dated February 14, 2001, Law No. 10,303/01 dated October 31, 2001 and
Law No. 10,411/02 dated February 26, 2002, which introduced new concepts and
several changes to Law No. 6,385 dated December 7, 1976, as amended and
supplemented (the "Brazilian Securities Law"), and in Law No. 6,404 of
December 15, 1976, as amended and supplemented (the "Brazilian Corporate Law")
and by regulations issued by the CVM, the Conselho Monetario Nacional
(National Monetary Council) and the Central Bank. These laws and regulations,
among others, provide for disclosure requirements, restrictions on insider
trading and price manipulation, and protection of minority shareholders. They
also provide for licensing and oversight of brokerage firms and governance of
Brazilian stock exchanges. However, the Brazilian securities markets are not as
highly regulated and supervised as U.S. securities markets.

      Under Brazilian Corporate Law, a company is either publicly held
(listed), a companhia aberta, such as AmBev, whose shares are publicly traded
on the Sao Paulo Stock Exchange (Bovespa), or privately held (unlisted), a
companhia fechada. All listed companies are registered with the CVM and are
subject to reporting and regulatory requirements. Law No. 10,303/01 allows the
CVM to classify listed companies according to the kind of securities they
issue. A company registered with the CVM may trade its securities either on the
Brazilian stock exchanges or in the Brazilian over-the-counter market. Shares
of companies like AmBev traded on the Sao Paulo Stock Exchange may not also
be traded on the Brazilian over-the-counter market. The shares of a listed
company, including AmBev, may also be traded privately subject to several
limitations. To be listed on the Sao Paulo Stock Exchange a company must
apply for registration with the CVM.

      The trading of securities on the Brazilian stock exchanges may be halted
at the request of a company in anticipation of a material announcement and are
sometimes required by law to request such suspension. Trading may also be
suspended on the initiative of a Brazilian stock exchange or the CVM, among
other reasons, based on or due to a belief that a company has provided
inadequate information regarding a significant event or has provided inadequate
responses to inquiries by the CVM or a stock exchange.

TRADING ON THE BRAZILIAN STOCK EXCHANGES

      On January 27, 2000, a formal protocol was signed merging the previous
nine Brazilian stock exchanges. Following the merger, the Sao Paulo Stock
Exchange is the only Brazilian stock exchange on which private equity and
private debt may be traded. The Sao Paulo Stock Exchange is a not-for-profit
entity owned by its member brokerage firms. Trading on the Sao Paulo Stock
Exchange is limited to member brokerage firms and a limited number of
authorized non-members.

      The Sao Paulo Stock Exchange trading sessions are from 10:00 a.m. to
5:00 p.m., subject to change during daylight savings time in the United States.
The Sao Paulo Stock Exchange Trading System is called Mega Bolsa and trades
all stocks that are not traded in the floor (in the same period from 10:00 a.m.
to 5 p.m. and from 4:45 p.m. to 5:00 p.m. there is a closing call). The Sao
Paulo Stock Exchange also permits trading from 5:45 p.m. to 7:00 p.m. on an
on-line system connected to traditional and Internet brokers called the After
Market. The After Market session is restricted to stocks that were traded in
the floor during the outcry session. Trading on the After Market is subject to
regulatory limits on price volatility and on the volume of shares transacted
through Internet brokers. CVM has discretionary authority to suspend trading in
shares of a particular issuer under specific circumstances. Securities listed

                                     127

<PAGE>



on the Sao Paulo Stock Exchange may also be traded off the exchange under
specific circumstances, but such trading is very limited.

      Settlement of transactions is effected three business days after the
trade date. Delivery of and payment for shares are made through the facilities
of separate clearing houses for each exchange, which maintain accounts for the
member brokerage firms. The seller is ordinarily required to deliver the shares
to the exchange on the second business day following the trade date. The
clearing house for the Sao Paulo Stock Exchange is Companhia Brasileira de
Liquidacao e Custodia (CBLC), which is owned by the Sao Paulo Stock
Exchange and its members.

      In order to better control volatility, the Sao Paulo Stock Exchange
has adopted a "circuit breaker"  mechanism pursuant to which trading sessions
may be suspended for a period of 30 minutes or one hour whenever the index of
the stock exchange downwards 10%. After that, if the market falls more 5%, the
Circuit Breaker is triggered again for one more hour. If the market falls more
than 15% no more pauses are taken. The "circuit breaker" is not allowed to be
started during the last 30 minutes of the trading session (from 4:30p.m. to
5:00 p.m.).

      Although the Brazilian equity market is Latin America's largest in terms
of market capitalization, it is smaller, more volatile and less liquid than the
major U.S. and European securities markets. At December 31, 2002, the aggregate
market capitalization of all the companies listed on Sao Paulo Stock
Exchange was equivalent to approximately R$ 439 billion. Although all of the
outstanding shares of a listed company are actually available for trading by
the public, in most cases fewer than half of the listed shares are actually
traded by the public because the remainder of a listed company's shares are
usually held by small groups of controlling persons, by governmental entities
or by one principal shareholder. For this reason, data showing the total market
capitalization of Brazilian stock exchanges tend to overstate the liquidity of
the Brazilian equity securities market.

      There is also significantly greater concentration in the Brazilian
securities markets. During the year ended December 31, 2002, the ten most
actively traded issues represented approximately 53.4% of the total volume of
shares traded on the Sao Paulo Stock Exchange, comparable to the 54.0% of
total volume in 2001.

      Trading on Brazilian stock exchanges by non-residents of Brazil is
subject to limitations under Brazilian foreign investment legislation. See "Key
Information-Exchange Rate Information-Exchange Controls" and "Additional
Information-Memorandum and Articles of Association-Restrictions on Foreign
Investment".


                                     128

<PAGE>
Additional Information


                    MEMORANDUM AND ARTICLES OF ASSOCIATION

      Set forth below is a brief summary of the material provisions concerning
our preferred shares, common shares, by-laws and the Brazilian Corporate Law.
In Brazil, the principal governing document of a corporation is the company's
by-laws (Estatuto Social). This description is qualified in its entirety by
reference to Brazilian Corporate Law and our by-laws. An English translation of
our by-laws has been filed with the Securities and Exchange Commission of the
United States (SEC) as an annex to our prospectus filed as part of the Form F-4
filed by us on August 29, 2002. A copy of our by-laws (together with an English
translation) is also available for inspection at the principal office of the
Depositary. Information on the trading market for our preferred shares is set
forth under "The Offer and Listing-Principal Market and Trading Market Price
Information" and information on ownership of our shares is set forth under
"Major Shareholders and Related Party Transactions-Major Shareholders".

      Our capital stock is comprised of preferred shares and common shares, all
without par value. At June 16, 2003, there were 22,801,455,371 total preferred
shares outstanding and 15,735,878,391 total common shares outstanding.

      Our preferred shares are non-voting except under limited circumstances
and are entitled to priority over our common shares in the case of liquidation.
See "-Voting Rights" for more information regarding the voting rights of our
preferred shares.

      Under Brazilian Corporate Law, as amended by Law No. 10,303/01, the
number of non-voting shares or shares with limited voting rights, such as our
preferred shares, may not exceed half (50%) of the total number of issued
shares. Before Law No. 10,303/01, the number of non-voting shares was at
two-thirds of the total number of shares. New companies have to observe the new
percentage to apply for registration before the CVM. Already existing companies
may keep existing proportion between common shares and preferred shares or they
may choose one of the following two options:  (i) issue new common shares up to
the amount necessary to adequate the issued shares to such proportion; or
(ii) buy preferred issued shares from the shareholders. Since these changes are
being conducted by operation of law, any procedures adopted by the company will
not grant appraisal rights to minority shareholders.

      The majority of members of our Board of Directors will be elected by the
controlling shareholders of our common shares. Board members, even if elected
by one specific shareholder, owe fiduciary duties towards our Company and all
of our shareholders. At the same time, any director appointed by shareholders
bound by a shareholders' agreement is also bound by the terms of such
agreement. See "-Major Shareholders and Related Party Transactions".

GENERAL

      Our registered name is Companhia de Bebidas das AMERICAS - AmBev and
our registered office is in Sao Paulo. Our registration number with the
Brazilian Commercial Registry is 35300157770. AmBev's principal corporate
purposes include the production and sale of beer, soft drinks and other
beverages. A more detailed description of AmBev's purposes can be found in
Chapter I, Article 3 of AmBev's by-laws.

BOARD OF DIRECTORS

      According to Brazilian Corporate Law, any matters subject to the approval
of the Board of Directors can be approved by a "simple majority" of votes of
the members present at the meeting. The same rules apply pursuant to AmBev's
by-laws.

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      Pursuant to AmBev's by-laws, any matters requiring the approval of the
Board of Directors will be approved by the affirmative vote of a majority of
its Board members present at the relevant meeting.

      In matters in which a director may have a conflict, Brazilian Corporate
Law sets forth that such director must disclose to the entire Board his/her
interest in the matter and abstain from voting. Any transaction that a director
may have an interest in can only be approved if carried out on an arm's-length
basis.

      The by-laws and the Brazilian Corporate Law require that our directors be
shareholders of the Company. Ownership of one share is sufficient to satisfy
this condition.

RESERVES AND DIVIDENDS

      The discussion below summarizes the main provisions of Brazilian
Corporate Law regarding the establishment of reserves by corporations and rules
with respect to the distribution of dividends, including provisions regarding
the interest charge attributed to shareholders' equity. Because dividends
payable by AmBev to its shareholders will derive primarily from the dividends
it receives from CBB and its subsidiaries, the discussion below contains
information with regard to both AmBev and CBB, in addition to generic
provisions under Brazilian Corporate Law.

      CALCULATION OF DISTRIBUTABLE AMOUNTS.

      At each annual shareholders' meeting, the Board of Directors is required
to propose how the company's earnings for the preceding fiscal year are to be
allocated. For purposes of Brazilian Corporate Law, a company's net income
after income taxes and social contribution taxes for such fiscal year, net of
any accumulated losses from prior fiscal years and amounts allocated to
employees' and management's participation in earnings represents its "income"
for such fiscal year. In accordance with Brazilian Corporate Law, an amount
equal to the company's "income", as adjusted (the "adjusted income", which we
will refer to as the "distributable amount") will be available for distribution
to shareholders in any particular year. Such distributable amount will be
affected by the following:

      o     reduced by amounts allocated to the social reserve, if any;

      o     reduced by amounts allocated to the statutory (legal) reserve;

      o     reduced by amounts allocated to the unrealized income reserve
            established by the company in compliance with applicable law (as
            discussed below); and

      o     increased by reversals of reserves constituted in prior years.

      Social Reserve. AmBev's by-laws provide that it may set aside up to 10%
of its "income" for payments to foundations (such as the FAHZ) which provide
welfare benefits to AmBev's employees and associates.

      Statutory (Legal) Reserve. Under Brazilian Corporate Law, corporations
(such as AmBev and CBB) are required to maintain a "legal reserve" to which
they must allocate 5% of their "income" for each fiscal year until the amount
of the reserve equals 20% of their paid-in capital. Accumulated losses, if any,
may be charged against the legal reserve. Other than that, the legal reserve
can only be used to increase the company's capital.


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      Reserve for Investment Projects. Under Brazilian Corporate Law, a portion
of a corporation's "income" may be allocated for discretionary appropriations
for plant expansion and other fixed or working capital investment projects, the
amount of which is based on a capital budget previously presented by management
and approved by shareholders. After completion of the relevant capital
projects, the company may retain the appropriation until a shareholder vote to
transfer all or a portion of the reserve to capital or retained earnings.

      Unrealized Income Reserve. The "unrealized income" in any particular year
represents the sum of the net credit balance from the:

      o     price-level restatement of some balance sheet accounts (through
            1995) in such year;

      o     share of equity earnings of subsidiary and associated companies in
            such year not yet distributed in the form of dividends; and

      o     profits from installment sales to be received after the end of the
            next succeeding fiscal year.

      Under Brazilian Corporate Law, the amount of "unrealized income" may be
allocated to an "unrealized income reserve" for any particular year in the
amount by which it exceeds the sum allocated to:

      o     the legal reserve; and

      o     the reserve for investment projects in such year.

      Tax Incentive Reserve. Under Brazilian tax laws, a portion of "income"
may also be allocated to a general "tax incentive reserve" in amounts
corresponding to reductions in the company's income tax generated by credits
for particular government-approved investments. The reserve is available only
in connection with the acquisition of capital stock of companies undertaking
specific government-approved projects.

      Brazilian Corporate Law provides that all discretionary allocations of
"income", including the unrealized income reserve and the reserve for
investment projects, are subject to approval by the shareholders voting at the
annual meeting and may be transferred to capital or used for the payment of
dividends in subsequent years. The tax incentive reserve and the legal reserve
are also subject to approval by the shareholders voting at the annual meeting
and may be transferred to capital or used to absorb losses, but are not
available for the payment of dividends in subsequent years.

      MANDATORY DIVIDEND.

      Under their by-laws, AmBev and CBB are required to distribute to
shareholders as dividends in respect to each fiscal year ending on December 31
an amount not less than 27.5%, respectively, of the distributable amount (the
mandatory dividend). In addition to the mandatory dividend, the Board of
Directors may recommend payment of dividends to the shareholders from other
funds legally available. Any payment of interim dividends or payment of
interest attributable to shareholders' equity will be netted against the amount
of the mandatory dividend for that fiscal year.

      Under Brazilian Corporate Law, the mandatory dividend must be paid in
every fiscal year. However, the mandatory dividend need not be paid in any
fiscal year in which the Board of Directors and executive officers advise the
shareholders at the annual shareholders' meeting that payment of the

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mandatory dividend would be incompatible with the company's financial
situation. While the law does not establish the circumstances in which payment
of the mandatory dividend would be "incompatible" with the company's financial
situation, it is generally agreed that a company need not pay the mandatory
dividend if such payment threatens the existence of the company as a going
concern or harms its normal course of operations. Non-payment of the mandatory
dividend must be approved by the company's fiscal committee (Conselho Fiscal).
In the case of publicly held corporations, its management must submit an
annual report setting out the reasons for non-payment of the mandatory
dividend to its shareholders and the CVM. If the mandatory dividend is not
paid and funds are available, those funds must be deposited in a special
reserve account. If amounts credited to this reserve are not absorbed by
losses incurred in subsequent fiscal years, they must be paid out in dividends
as soon as this is compatible with the financial situation of the company.

      DIVIDEND PREFERENCE OF PREFERRED SHARES.

      Pursuant to AmBev's by-laws, the preferred shareholders, if any, of AmBev
are entitled to dividends 10% greater than the dividends to be paid to its
common shareholders.

      PAYMENT OF DIVIDENDS.

      AmBev is required by Brazil's corporate laws to hold an annual
shareholders' meeting by no later than April 30 of each year, at which time an
annual dividend may be declared. Additionally, interim dividends may be
declared by the Board of Directors. Any holder of record of shares at the time
of a dividend declaration is entitled to receive dividends. Under Brazilian
Corporate Law, dividends are generally required to be paid to the holder of
record on a dividend declaration date within 60 days following the date the
dividend was declared, unless a shareholders' resolution sets forth another
date of payment, which, in either case, must occur prior to the end of the
fiscal year in which such dividend was declared. AmBev's by-laws do not provide
for a time frame for payment of dividends. The mandatory dividend is satisfied
through payments made in the form of dividends and interest attributable to
shareholders' equity, which is equivalent to a dividend but is a more tax
efficient way to distribute earnings from the companies' perspective, as it is
generally deductible for income tax purposes. Any holder of record of shares at
the time of a dividend declaration is entitled to receive dividends. A
shareholder has a three-year period from the dividend payment date to claim
dividends in respect of its shares, after which the company has no liability
for such payment.

      Payments to ADS holders. Dividends paid to shareholders that are not
Brazilian residents, including holders of our American Depositary Shares
(ADSs), are exempt from Brazilian withholding tax with respect to profits
accrued as from January 1, 1996. Shareholders who are not residents of Brazil
must register their investment with the Central Bank in order for dividends,
sales proceeds or other amounts to be eligible for remittance in foreign
currency outside of Brazil. The preferred and common shares underlying our ADSs
are held in Brazil by the custodian (Banco Itau S.A.), as agent for the
depositary (The Bank of New York), which is the registered owner of AmBev
shares. Payments of cash dividends and distributions, if any, on AmBev common
and preferred shares will be made in Brazilian reais to the custodian on behalf
of The Bank of New York, which will then convert such proceeds into U.S.
dollars and will deliver such U.S. dollars to The Bank of New York for
distribution to the holders of AmBev ADSs. In the event that the custodian is
unable to immediately convert the real dividends into U.S. dollars, holders of
the preferred and common AmBev ADSs may be adversely affected by devaluations
or other exchange rate fluctuations before such dividends can be converted and
remitted. Fluctuations in the exchange rate between the real and the U.S.
dollar may also affect the U.S. dollar equivalent of the reais price of the
preferred and common shares of AmBev on the Brazilian stock exchanges.

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INTEREST ATTRIBUTABLE TO SHAREHOLDERS' EQUITY

      Pursuant to a change in Brazilian tax law effective January 1, 1996,
Brazilian companies are permitted to pay limited amounts to shareholders of
equity securities and treat such payments as an expense for Brazilian income
tax purposes and, beginning in 1998, for social contribution purposes. The
purpose of the tax law change is to encourage the use of equity investment, as
opposed to debt, to finance corporate activities. The amount of any such
notional "interest" payment to holders of equity securities is generally
limited in respect of any particular year to the greater of (a) 50% of retained
earnings for such year or (b) 50% of pre-tax profits for such year multiplied
by the Taxa de Juros de Longo Prazo (TJLP) interest rate, which is the official
rate for governmental long-term loans. For accounting purposes, although the
interest charge must be reflected in the statement of operations to be
tax-deductible, the charge is reversed before calculating net income in the
statutory financial statements and deducted from shareholders' equity in a
manner similar to a dividend. A 15% withholding tax is due by the shareholders
upon receipt of the interest amount but the tax is usually paid by the
companies on behalf of the shareholders, upon distribution of the interest.
Beginning in 1997, the withholding tax has been paid by Brahma and Antarctica
on behalf of its shareholders. As from 1998, such payments are also deductible
for social contribution purposes.

      Interest attributable to shareholders' equity is treated as a dividend
for purposes of the mandatory dividend.

VOTING RIGHTS

      Each common share entitles its holder to one vote at meetings of
shareholders of AmBev. Holders of preferred shares are not entitled to vote at
AmBev's shareholders' meetings.

      Brazilian Corporate Law provides that non-voting shares entitled to
receive minimum or fixed dividends acquire voting rights in the event that a
company fails to pay the minimum or fixed dividends to which such shares are
entitled for three consecutive fiscal years. The voting rights continue until
payment of dividends is resumed (or until all dividends due are paid, in the
case of preferred shares with cumulative votes). Pursuant to AmBev's by-laws,
the existing preferred shares of AmBev will not acquire such voting rights as
AmBev preferred shares are not entitled to receive minimum or fixed dividends.

ELECTION OF DIRECTORS

      Each common share of AmBev represents one vote at any shareholders'
meeting in connection with the election of the Board of Directors of AmBev. Due
to recent changes introduced by Law No. 10,303/01, minority shareholders
holding at least 15% of voting capital or preferred shareholders holding at
least 10% of total capital may each elect one member of the Board of Directors
and its alternate member. Additionally, if such shareholders do not achieve
such percentage, they can jointly appoint one member of the Board of Directors
and its alternate member once they represent, together, at least 10% of total
capital. In order to exercise these minority rights, the shareholders must
prove that they have held the shares for at least the last three months.

      If such prerogative is exercised with the adoption of a cumulative voting
procedure, the controlling shareholder would always have the right to elect the
same numbers of members plus one, independently of the number of directors.

      Additionally, until the 2005 Ordinary Shareholders Meetings, the director
appointed by preferred shareholders (whether or not together with voting
minority shareholders) shall be selected from a three-name list previously
prepared by the controlling shareholder.


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      Shareholders holding shares representing at least 10% of the shares
entitled to vote in the shareholders' meeting, or such smaller percentage
applicable according to a sliding scale determined by the CVM and based on the
capital of the company, have the right to request that a cumulative voting
procedure be adopted. Under such procedure, each voting share shall have as
many votes as there are positions of directors to be filled, and each
shareholder may cast all the votes for a single candidate or distribute them
among various candidates.

      Under the by-laws of AmBev and applicable law, the number of directors
may be reduced to a minimum of three. Under Brazilian Corporate Law, if the
number of directors is reduced to five or less, the percentage necessary for
any minority shareholder or group of minority shareholders to elect at least
one member of the Board of Directors under the cumulative vote procedure cannot
exceed 20% of the voting shares of AmBev. Because the AmBev shareholders'
agreement provides that the FAHZ shall have the right to appoint four members
of the Board of Directors, any reduction in the number of such members to fewer
than four would be subject to the FAHZ's approval.

LIQUIDATION

      In the event of liquidation, a general shareholders meeting shall
determine the form of liquidation and appoint a financial committee to operate
during the liquidation period. See "-Shareholders' Meeting". A liquidator will
be appointed by the Board of Directors.

      Upon liquidation, the AmBev preferred shares have an absolute preference
over the AmBev common shares. In the event of a liquidation, the assets
available for distribution to AmBev's shareholders would be distributed first
to the preferred shareholders in an amount equal to their pro rata share of the
legal capital of the company (AmBev's current by-laws state that its capital is
R$3,124,058,673.54), prior to making any distributions to AmBev's common
shareholders. In the event that the assets to be so distributed are
insufficient to fully compensate AmBev's preferred shareholders, the preferred
shareholders would each receive a pro rata amount (based on their pro rata
share of the legal capital of the company excluding the common shares in such
calculation) of any available assets.

      Although the FAHZ's assets are consolidated for the purposes of U.S.
GAAP, in the event of liquidation, the creditors of AmBev would not have access
to the assets of the FAHZ.

SHAREHOLDERS' MEETING

      A general meeting is convened by publishing, no fewer than 15 days prior
to the scheduled meeting date and no fewer than three times, a notice in the
Diario Oficial do Estado de Sao Paulo and in a newspaper with general
circulation in Sao Paulo, where AmBev has its registered office. The
shareholders of AmBev have previously designated local newspapers in the cities
of Sao Paulo for this purpose. Such notice must contain the agenda for the
meeting.

      A general meeting may be held if shareholders representing at least
one-quarter of the voting shares are present. If no such quorum is present,
notice must again be given in the same manner as described above, and a meeting
may then be convened without any specific quorum requirement, subject to the
minimum quorum and voting requirements for specific matters, as discussed
below. A shareholder without a right to vote may attend a general meeting and
take part in the discussion of matters submitted for consideration.

      Except as otherwise provided by law, resolutions of a general meeting are
passed by a simple majority vote of the shares present or represented at the
meeting, abstentions not being taken into account. Under Brazilian Corporate
Law, the approval of shareholders representing at least a majority of the
issued

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and outstanding voting shares is required for the types of action described
below, as well as, in the case of items (a) and (b), a majority of issued and
outstanding shares of the affected class:

      (a)   creating preferred shares or increasing disproportionately an
            existing class of preferred shares relative to the other classes of
            shares, unless such action is provided for or authorized by the
            by-laws;

      (b)   modifying a preference, privilege or condition of redemption or
            amortization conferred on one or more classes of preferred shares,
            or creating a new class with greater privileges than the existing
            classes of preferred shares;

      (c)   reducing the mandatory dividend;

      (d)   merging AmBev with another company or consolidating or splitting
            it;

      (e)   participating in a centralized group of companies as defined under
            Brazilian Corporate Law;

      (f)   changing the corporate objectives of AmBev;

      (g)   creating founders' shares; and

      (h)   dissolving or liquidating AmBev, or ceasing its liquidation status.

      General meetings can be called by the Board of Directors of AmBev. Under
the Brazilian Corporate Law, meetings can also be convened by AmBev's
shareholders as follows: (i) by any shareholder if, under certain circumstances
set forth in the Brazilian Corporate Law, the directors take more than 60 days
to convene a general shareholders' meeting; (ii) by the shareholders of at
least 5% of AmBev's total capital stock if, after a period of 8 days, the
directors fail to call a general shareholders' meeting that has been requested
by such shareholders; and (iii) by the shareholders of at least 5% of either
AmBev's total voting capital stock or AmBev's total non-voting capital stock
if, after a period of 8 days, the directors fail to call a general meeting for
the purpose of installing a fiscal committee that has been requested by such
shareholders. Additionally, under certain circumstances set forth in the
Brazilian Corporate Law, meetings can also be convened by AmBev's fiscal
committee. For further information regarding AmBev's financial committee, see
"Directors, Senior Management and Employees-Directors-Board Practices-Fiscal
Committee".

      A shareholder may be represented at a general meeting by an
attorney-in-fact appointed no more than one year before the meeting, who must
be a shareholder, a company officer or a lawyer. For a public company such as
AmBev, the attorney-in-fact may also be a financial institution.

RESTRICTIONS ON FOREIGN INVESTMENT

      There are no restrictions on ownership or voting rights in respect of
capital stock of AmBev owned by individuals or legal entities domiciled outside
Brazil. For a description of voting rights, see

      "-Voting Rights". The right to convert dividend payments and proceeds
from the sale of preferred or common shares into foreign currency and to remit
such amounts outside Brazil, however, is subject to exchange control
restrictions and foreign investment legislation. For a description of these
exchange control restrictions and foreign investment legislation, see "Key
Information-Exchange Controls".

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APPRAISAL RIGHTS

      Under Brazilian Corporate Law, a dissenting shareholder has the right to
withdraw from AmBev and be reimbursed for the value of the common or preferred
shares held, whenever a decision is taken at a shareholders' meeting by a
qualified quorum of shareholders representing at least 50% of the total
outstanding voting capital to:

      o     create preferred shares or increase disproportionately an existing
            class of preferred shares relative to the other classes of shares,
            unless such action is provided for or authorized by AmBev's
            by-laws;

      o     modify a preference, privilege or condition of redemption or
            amortization conferred on one or more classes of preferred shares,
            or create a new class with greater privileges than the existing
            classes of preferred shares;

      o     reduce the mandatory dividend;

      o     merge or consolidate AmBev with another company; ([1])

      o     participate in a centralized group of companies; ([2])

      o     change the corporate objectives of AmBev;

      o     transfer all or a substantial part of the assets of AmBev to
            another company even when the purpose is to create a wholly or
            partially-owned subsidiary (cisao);(2)

      o     liquidate AmBev; or

      o     approve the acquisition of another company, the price of which
            exceeds the limits set forth in Brazilian Corporate Law.

      Furthermore, if a governmental entity acquires control of AmBev through
expropriation of shares, shareholders will have the right to withdraw from
AmBev and be reimbursed for the value of the shareholders' equity attributable
to their equity interest.

       The appraisal rights lapse 30 days after publication of the minutes of
the relevant shareholders' meeting in the Brazilian press. AmBev would be
entitled to reconsider any action triggering appraisal rights within 10 days
following the expiration of such rights if the redemption of shares of
dissenting shareholders would jeopardize the financial stability of AmBev.
Shares to be purchased by AmBev from the dissenting shareholders exercising
appraisal rights will be valued at an amount equal to the ratable portion
attributable to such shares of the shareholders' equity of AmBev as shown on
the last balance sheet approved at a general meeting of the shareholders (book
value). However, if more than 60 days have

----------------

(1)  As defined under Law 10,303/01, appraisal rights shall not apply in
     connection with these matters when the company's shares fulfill both
     requirements of liquidity (shares are included in securities portfolio
     negotiated in futures stock exchanegs within Brazil or abroad (as
     determined by CVM) such as IBOVEDSPA index of the Sao Paulo Stock
     Exchange) and dispersion (less than 50% of the outstanding shares of the
     company are held, directly or indirectly, by the controlling shareholders).
     The latter is AmBev's current situation, which means dissenting
     shareholders of AmBev would not have appraisal rights upon occurrence of
     any of these cases.

(2)  As defined under Law 10,303/01, appraisal rights shall apply in connection
     with disposition of assets only inc ase of (i) a change in the company's
     objectives: (ii) reduction of mandatory dividends; or (iii) particpation
     in a centralized group of companies.


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elapsed since the date of such balance sheet; dissenting shareholders may
require that the value of their shares be calculated on the basis of a new
balance sheet. As a general rule, shareholders who acquire their shares after
the first notice convening the shareholders' meeting or after the relevant
press release concerning the meeting are published will not be entitled to
appraisal rights.

PREEMPTIVE RIGHTS

      Each shareholder of AmBev generally has a preemptive right to subscribe
for shares in capital increases, in proportion to its shareholdings. A minimum
period of 30 days following the publication of notice of the capital increase
is allowed for the exercise of the right and the right is negotiable. In the
event of a capital increase which would maintain or increase the proportion of
capital represented by preferred or common shares, holders of preferred ADSs or
common ADSs, as the case may be, would have preemptive rights to subscribe only
to newly issued preferred shares or common shares, as applicable. In the event
of a capital increase which would reduce the proportion of capital represented
by preferred shares or common shares, holders of preferred ADSs or common ADSs,
as the case may be, would have preemptive rights to subscribe for preferred
shares or common shares, as applicable, in proportion to their shareholdings
only to the extent necessary to prevent dilution of their interest in AmBev.
AmBev's by-laws provide that its Board of Directors may, within the limit of
its authorized capital, withdraw preemptive rights to existing shareholders in
connection with an increase in share capital through sale in stock exchanges,
public offerings or public tender offers. In addition, Brazilian law provides
that the exercise of stock options pursuant to certain stock option plans, such
as our stock ownership plan, is not subject to preemptive rights.

FORM AND TRANSFER

      Brazilian law provides that ownership of shares of capital stock of a
Brazilian corporation shall generally be evidenced only by a record of
ownership maintained by either the corporation or an accredited intermediary,
such as a bank, acting as a registrar for the shares. Banco Itau S.A.
currently maintains AmBev's share ownership records.

      Because the preferred shares and common shares of AmBev are in registered
book-entry form, a transfer of such preferred and common shares is made under
the rules of Brazilian Corporate Law, which provides that a transfer of shares
is effected by an entry made by the registrar for AmBev's shares in its books,
by debiting the share account of the transferor and crediting the share account
of the transferee.

      Transfers of preferred and common shares by a foreign investor are made
in the same way and executed by such investor's local agent on the investor's
behalf except that, if the original investment was registered with the Central
Bank pursuant to the foreign investment regulations, the foreign investor
should also seek amendment, if necessary, through its local agent, of the
certificate of registration to reflect the new ownership.

      The Sao Paulo Stock Exchange operates a central clearing system. A
holder of shares of AmBev may choose, at its discretion, to participate in this
system and all shares elected to be put into the system will be deposited in
custody with the relevant stock exchange, through a Brazilian institution that
is duly authorized to operate by the Central Bank and maintains a clearing
account with the relevant stock exchange. The fact that such shares are subject
to custody with the relevant stock exchange will be reflected in AmBev's
registry of shareholders. Each participating shareholder will, in turn, be
registered in the register of beneficial shareholders of AmBev that is
maintained by the relevant stock exchange and will be treated in the same way
as registered shareholders.

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DISCLOSURE OF PRINCIPAL SHAREHOLDERS

      Under Brazilian law, shareholders owning more than ten percent of a
company's voting shares, such as the holders of AmBev's common shares, must
publicly disclose their shareholder ownership.

CHANGES IN CAPITAL

      The share capital of AmBev is comprised of common shares and preferred
shares, all without par value. There are currently no other classes or series
of preferred shares outstanding. Under Brazilian Corporate Law, the number of
preferred non-voting or other restricted voting shares, such as the preferred
shares, may not exceed half (50%) of the total number of outstanding shares.
See "Additional Information-Memorandum and Articles of Association". The
by-laws of AmBev do not provide for the conversion of preferred shares into
common shares.

                                 MATERIAL CONTRACTS

      The following is a summary of the material contracts to which we are a
party. For directions on how to obtain these documents, see "Exhibits and
certifications".

SHAREHOLDERS AGREEMENT

      The agreement between the shareholders of Brahma and Antarctica to form
AmBev is discussed in "Major Shareholders and Related Party Transactions-Major
Shareholders-AmBev Shareholders Agreement".

GOVERNANCE AGREEMENT

      The agreement relating to the governance of AmBev entered into between
Fundacao, Braco, ECAP, AmBev and BAC pursuant to the stock purchase
agreement between AmBev and BAC is  discussed in "Major Shareholders and
Related Party Transactions-Major Shareholders-AmBev Share Transfer Agreement
and AmBev Governance Agreement".


ACQUISITIONS, DISPOSITIONS AND JOINT VENTURES

      We have discussed the details of all material acquisitions, dispositions
and joint ventures in "Information on the Company-Acquisition of Interest in
Quinsa", "Information on the Company-Other Acquisitions and Dispositions" and
"Information on the Company-Joint Ventures and Strategic Alliances".

ANTITRUST PERFORMANCE AGREEMENTS

      We are currently subject to two antitrust performance agreements in
effect. See "Consolidated Financial Statements and Other Financial
Information-Legal Proceedings". The first one was signed with CADE in Brazil
and relates to the Brahma and Antarctica combination. The second one relates to
the acquisitions of our economic interest in Quinsa and was signed with the
Argentinean CNDC. See "Information on the Company-Acquisition of Interest in
Quinsa".

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DEBT ISSUANCES

      In August 2001, AmBev raised Japanese Yen 39,060 million through a
syndicated loan. The loan has a three-year maturity and an interest rate of Yen
LIBOR plus 2.37% per annum. This loan is jointly guaranteed by AmBev and its
subsidiaries and is subject to indebtedness and liquidity ratios.

      During the year ended December 31, 2002, CBB completed an exchange offer
of the U.S. $500,000,000 10 1/2% notes due December 2011, in the U.S.
securities markets. AmBev fully and unconditionally guaranteed this issuance.
This guarantee will terminate on the date that AmBev is unconditionally and
irrevocably released from all its obligations as guarantor under the indenture
dated as of December 19, 2001.

RAW MATERIALS AND PACKAGING

      We have a number of contracts to buy certain key ingredients in the
production process of both beer and soft drinks, as well as materials used in
the packaging of our products such as aluminum, plastic and glass. See
"Information on the Company-Production and Availability of Raw Materials" and
"Operating and Financial Review and Prospects-Commitments and Contingencies".


                                   TAXATION

      The following discussion summarizes the principal Brazilian and U.S.
Federal income tax consequences of acquiring, holding and disposing of notes,
preferred shares or preferred ADSs or AmBev's common shares or common ADSs.
This discussion is not a comprehensive discussion of all the tax considerations
that may be relevant to a decision to purchase, hold or dispose notes,
preferred shares or preferred ADSs or common shares or common ADSs and is not
applicable to all categories of investors, some of which may be subject to
special rules. Each prospective purchaser is urged to consult its own tax
advisor about the particular Brazilian and U.S. tax consequences to it of an
investment in the preferred shares or preferred ADSs or common shares or common
ADSs.

      The summary is based upon tax laws of Brazil and the U.S. and the
regulations thereunder, as in effect on the date hereof, which are subject to
change (possibly with retroactive effect). Although there is at present no
income tax treaty between Brazil and the U.S. , the tax authorities of the two
countries have had discussions that may culminate in a treaty. No assurance can
be given, however, as to whether or when a treaty will enter into force or of
how it will affect the U.S. Holders of, or, any of the notes, preferred shares,
preferred ADSs, common shares, or common ADSs. This summary is also based on
representations of the depositary and on the assumption that each obligation in
the Deposit Agreement relating to the preferred ADSs and common ADSs, as
applicable, and the related documents will be performed in accordance with its
terms.

BRAZILIAN TAX CONSIDERATIONS

      The following discussion summarizes the principal Brazilian tax
consequences of the acquisition, ownership and disposition of preferred and
common shares of AmBev or preferred and common ADSs of AmBev by a holder that
is not deemed to be domiciled in Brazil for purposes of Brazilian taxation and,
in the case of a holder of preferred or common shares, which has registered its
investment in such securities with the Central Bank as a U.S. dollar investment
(in each case, a Non-Brazilian Holder). The discussion does not purport to be a
comprehensive description of all tax considerations that may be relevant to a
decision to purchase preferred or common shares or preferred or common ADSs. It
is based on Brazilian law as currently in effect. Any change in such law may
change the consequences described below. The following discussion does not
specifically address all of the Brazilian tax considerations applicable to any
particular Non-Brazilian Holder, and each Non-Brazilian Holder should consult
his or her own tax advisor


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concerning the Brazilian tax consequences of an investment in preferred or
common shares or preferred or common ADSs of AmBev.

      Taxation of Dividends. Dividends, including dividends in kind, paid by
AmBev to The Bank of New York in respect of the preferred or common shares
underlying the ADSs or to a Non-Brazilian Holder in respect of preferred or
common shares generally will not be subject to Brazilian withholding tax.
Dividends relating to profits generated prior to December 31, 1995 are subject
to a Brazilian withholding tax of 15% to 25% according to the tax legislation
applicable to each corresponding year. As from January 1, 1996, dividends
relating to profits are not subject to withholding tax in Brazil.

      Taxation of Gains. Gains realized outside of Brazil by a Non-Brazilian
Holder on the disposition of preferred or common ADSs to another Non-Brazilian
Holder are not subject to Brazilian tax.

      The withdrawal of preferred or common ADSs in exchange for preferred or
common shares is not subject to Brazilian tax. The deposit of AmBev's preferred
or common shares in connection with the issuance of preferred or common ADSs is
not subject to Brazilian tax, provided that the preferred or common shares are
registered under the Foreign Investment Regulations. There is a special
taxation system applicable to Non-Brazilian Holders (provided investments are
duly registered under the Foreign Investment Regulations and with CVM and other
conditions are fulfilled); however, such system is not applicable if the Non-
Brazilian Holder is located in a jurisdiction which does not impose income tax
or which has an income tax lower than 20%[3]. Upon receipt of the underlying
preferred or common shares, a Non-Brazilian Holder who qualifies under the
Foreign Investment Regulations will be entitled to register the U.S. dollar
value of such shares with the Central Bank as described below.

      Non-Brazilian Holders are not subject to tax in Brazil on gains realized
on sales of preferred or common shares that occur abroad. As a general rule,
Non-Brazilian Holders are subject to a withholding tax imposed at a rate of 15%
on gains realized on sales or exchanges of preferred or common shares that
occur in Brazil to or with a resident of Brazil, outside a Brazilian stock
exchange. Non-Brazilian Holders are generally subject to withholding tax at a
rate of 20% (transactions occurred after January 1, 2002) on gains realized on
sales or exchanges in Brazil of preferred or common shares that occur on a
Brazilian stock exchange, unless (a) such a sale is made within five business
days of the withdrawal of such preferred or common shares in exchange for ADSs
and the proceeds of such sale are remitted abroad within such five-day period,
or (b) such a sale is made under the Foreign Investment Regulations by
Non-Brazilian Holders which register with the CVM, in which case such gains are
exempt. If the foreign investor is located in a jurisdiction which does not
impose income tax or which has an income tax rate lower than 20%, it will be
subject to the same general taxation rules applicable to Brazilian residents.
The "gain realized" as a result of a transaction on a Brazilian stock exchange
is the difference between the amount in Brazilian currency realized on the sale
or exchange of the shares and their acquisition cost, without any correction
for inflation. The "gain realized" as a result of a transaction with shares
which are registered under a certificate of registration of investment (other
than Foreign Investment Regulations) will be calculated based on the foreign
currency amount registered with the Central Bank. There can be no assurance
that the current preferential treatment for holders of ADSs and Non-Brazilian
Holders of preferred and common shares under the Foreign Investment Regulations
will continue in the future or that

----------------

(3)  The countries currently included in this concept, according to Normative
     Instruction 188/02, are:  American Samoa, Andorra, Anguilla, Antigua and
     Barbuda, Aruba, Bahamas, Bahrain, Barbados, Belize, Bermuda, British
     Virgin Islands, Campione D'Italia, Cayman Islands, Channel Islands
     (Jersey, Guernsey, Alderney and Sark, Cook Islands, Costa Rica, Cyprus,
     Djibouti, Dominica, Gibraltar, Grenada, Hong Kong, Isle of Man, Lebanon,
     Lebuan, Liberia, Liechtenstein, Luxembourg (only to holding companies
     governed by Law dated 7/31/1929), Macau, Madeira Islands, Maldives, Malta,
     Marshall Islands, Mauricio, Monaco, Montserrat, Nauru, Netherland Antilles,
     Niue, Oman, Panama, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and
     The Grenadines, San Marino, Seychelles, Singapore, Tonga, Turks and Caicos
     Islands, United Arab Emirates, US Virgin Emirates, US Virgin Islands,
     Vanuatu and Western Samoa.


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it will not be changed in the future. Reductions in the tax rate provided for
by Brazil's tax treaties do not apply to tax on gains realized on sales or
exchanges of preferred or common shares.

      Any exercise of preemptive rights relating to the preferred or common
shares or preferred or common ADSs of AmBev will not be subject to Brazilian
taxation. Any gain on the sale or assignment of preemptive rights relating to
the preferred or common shares by The Bank of New York will not be subject to
Brazilian taxation.

      The United States and Brazil do not currently have any reciprocal tax
treaty regarding tax withholding provisions.

      Distributions of Interest Attributable to Shareholders' Equity. In
accordance with Law No. 9,249, dated December 26, 1995, Brazilian corporations
may make payments to shareholders characterized as distributions of interest on
the company's shareholders' equity. Such interest is limited to the federal
government's long-term interest rate (TJLP) as determined by the Central Bank
from time to time (9.25% per annum for the three-month period starting April 1,
2001), and cannot exceed the greater of:

      o     50% of net income (before taking such distribution and any
            deductions for income taxes into account) for the period in
            respect of which the payment is made; or

      o     50% of retained earnings.

      Distributions of interest on shareholders' equity in respect of the
preferred or common shares paid to shareholders who are either Brazilian
residents or non-Brazilian residents, including holders of ADSs, are subject to
Brazilian withholding tax at the rate of 15% and shall be deductible by AmBev
as long as the payment of a distribution of interest is approved in a general
meeting of shareholders of AmBev. The distribution of interest on shareholders'
equity may be determined by the Board of Directors of AmBev. No assurance can
be given that the Board of Directors of AmBev will not determine that future
distributions of profits may be made by means of interest on shareholders'
equity instead of by means of dividends.

      The amounts paid as distribution of interest on shareholders' equity are
deductible for corporate income tax and social contribution on profit, both of
which are taxes levied on AmBev's profits.

OTHER RELEVANT BRAZILIAN TAXES

      There are no Brazilian inheritance, gift or succession taxes applicable
to the ownership, transfer or disposition of preferred or common shares or
preferred or common ADSs by a Non-Brazilian Holder except for gift and
inheritance taxes which are levied by some states of Brazil on gifts made or
inheritances bestowed by individuals or entities not resident or domiciled in
Brazil or domiciled within the state to individuals or entities resident or
domiciled within such state in Brazil. There is no Brazilian stamp, issue,
registration or similar taxes or duties payable by holders of preferred or
common shares or preferred or common ADSs.

      Pursuant to Decree 2,219 of May 2, 1997, Brazilian currency resulting
from the conversion of the proceeds received by a Brazilian entity from a
foreign investment in the Brazilian securities market, including those in
connection with the investment in the preferred or common shares of AmBev, the
preferred or common ADSs of AmBev and those made under Foreign Investment
Regulations, is potentially subject to a transactions tax (IOF), although at
present the rate of such tax is zero percent. Under Law 8,894 of June 21, 1994,
such IOF tax rate may be increased at any time to a maximum of 25%,

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but any such increase will only be applicable to transactions occurring after
such increase becomes effective.

      CPMF. Financial transfers are taxed by the CPMF (Temporary Contribution
over Financial Transactions), at a rate of 0.38%. Specifically in connection
with foreign investments, the CPMF is levied upon the remittance of proceeds on
the amount converted in reais of the transaction and is required to be withheld
by the financial institution that carries out the transaction.

      Registered Capital. The amount of an investment in preferred or common
shares held by a Non-Brazilian Holder who qualifies under the Foreign
Investment Regulations and obtains registration with the CVM, or by The Bank of
New York, as the depositary representing such holder, is eligible for
registration with the Central Bank. Such registration allows the remittance
outside of Brazil of any proceeds of distributions on the shares, and amounts
realized with respect to disposition of such shares. The amounts received in
Brazilian currency are converted into foreign currency through the use of the
commercial market rate. The registered capital for preferred shares purchased
in the form of a preferred ADS or common shares purchased in the form of a
common ADS or purchased in Brazil, and deposited with The Bank of New York in
exchange for a preferred or common ADS, will be equal to their purchase price
(in U.S. dollars) to the purchaser. The registered capital for preferred or
common shares that are withdrawn upon surrender of preferred or common ADSs, as
applicable, will be the U.S. dollar equivalent of the average price of the
preferred or common shares, as applicable, on the Brazilian stock exchange on
which the greatest number of such preferred or common shares, as applicable,
was sold on the day of withdrawal. If no preferred or common shares, as
applicable, were sold on such day, the registered capital will refer to the
average price on the Brazilian stock exchange on which the greatest number of
preferred or common shares, as applicable, was sold in the 15 trading sessions
immediately preceding such withdrawal. The U.S. dollar value of the preferred
or common shares, as applicable, is determined on the basis of the average
commercial market rate quoted by the Central Bank on such date or, if the
average price of preferred or common shares is determined under the last
preceding sentence, the average of such average quoted rates on the same 15
dates used to determine the average price of the preferred or common shares.

      A Non-Brazilian Holder of preferred or common shares may experience
delays in effecting such action which may delay remittances abroad. Such a
delay may adversely affect the amount, in U.S. dollars, received by the
Non-Brazilian Holder.

BRAZILIAN TAXATION ON THE NOTES

      This summary is limited to noteholders that are non-residents in Brazil
and is based on the tax regulations presently in force, thus not contemplating
any possible changes in Brazilian tax legislation in the future.

      Interest on the notes (including any additional amount) paid, credited,
delivered, used or remitted to non-residents is subject to a 15% withholding
income tax or a lower rate if so provided for in the applicable tax treaty to
avoid double taxation signed between Brazil and the country where the recipient
of the note is domiciled. The rate is increased to 25% in case both of the
following situations occur: (i) the beneficiary of the payment is domiciled in
a tax haven jurisdiction, defined by Brazilian tax laws as a country that does
not impose a tax on income or imposes such a tax at 20% or less, and (ii) if
any portion of principal under any such debt obligation is repaid in a way that
the average life of the debt obligation becomes less than 96 months from the
disbursement date. In this case payments made by the obligor to those
beneficiaries in respect of interest and other additional amounts will be
retroactively subject to a withholding tax of 25% plus an interest penalty for
late payment, calculated from the disbursement date onwards.

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      Brazilian tax law expressly authorizes that the payment of this
withholding income tax be borne by the Brazilian paying entity so allowing the
payment of the remuneration free of any tax. Under the terms of the Indenture
among CBB, as Issuer, the Bank of New York, as Trustee, and Deutsche Bank
Luxembourg S.A., as Paying Agent, related to the notes, all payments of or in
respect of principal and interest on the notes shall be made free and clear of,
and without withholding or deduction for or on account of, any present or
future taxes, penalties, fines, duties, assessments or other governmental
charges of whatsoever nature.

      Earnings or capital gains resulting from the sale, exchange, retirement
or other kind of disposition of the notes by a non-resident in Brazil to
another person non-resident in Brazil is not subject to any Brazilian tax. A
disposition of these notes by a non-resident to a Brazilian resident, in
principle is not subject to taxation, but the issue is disputable.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

      The following summary describes the material U.S. Federal income tax
consequences of holding notes, preferred shares, preferred ADSs, common shares
or common ADSs. This summary is based on the Internal Revenue Code of 1986, as
amended (the Code), its legislative history, existing final, temporary and
proposed Treasury Regulations, rulings and judicial decisions, all as currently
in effect and all of which are subject to prospective and retroactive rulings
and changes.

      This summary does not purport to address all U.S. Federal income tax
consequences that may be relevant to a particular holder and you are urged to
consult your own tax advisor regarding your specific tax situation. The summary
applies only to holders who hold notes, preferred shares, preferred ADSs,
common shares or common ADSs as "capital assets" (generally, property held for
investment) under the Code, and, in the case of the notes, only holders who
purchased their notes in the initial offering at the issue price. This summary
does not address the tax consequences that may be relevant to holders in
special tax situations including, for example:

      o     insurance companies;

      o     tax-exempt organizations;

      o     dealers in securities or currencies;

      o     traders in securities that elect to use a mark to market method of
            accounting for their securities holdings;

      o     banks, mutual funds or other financial institutions;

      o     holders whose functional currency for tax purposes is not the
            United States dollar;

      o     United States expatriates;

      o     an S corporation or small business investment company;

      o     real estate investment trusts;

      o     investors in a pass-through entity;


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      o     holders of notes, preferred shares, preferred ADSs, common shares
            or common ADSs as part of a hedge, straddle, conversion or other
            integrated transaction, for tax purposes;

      o     holders who own, directly, indirectly, or constructively, 10% or
            more of the total combined voting power of our stock (including by
            way of owning preferred shares, preferred ADSs, common shares or
            common ADSs); or

      o     holders who acquired their notes, preferred shares, preferred
            ADS's, common shares or common ADS's as compensation.

      This summary assumes that the notes represent indebtedness of U.S.$500.0
million and that we are not a passive foreign investment company (PFIC) for
U.S. Federal income tax purposes. Please see the discussion under "-Taxation of
U.S. Holders-Passive Foreign Investment Company Rules" below.

      Further, this summary does not address the alternative minimum tax
consequences of holding notes, preferred shares, preferred ADSs, common shares
or common ADSs or the indirect consequences to holders of equity interests in
entities that own our preferred shares, preferred ADSs, common shares or common
ADSs. In addition, this summary does not address the state, local, foreign or
other tax consequences, if any, of holding our notes, preferred shares,
preferred ADSs, common shares or common ADSs.

      You should consult your own tax advisor regarding the U.S. Federal,
state, local and foreign and other tax consequences of acquiring, owning and
disposing of notes, preferred shares, preferred ADSs, common shares or common
ADSs in your particular circumstances.

      We also urge to all holders to consult their tax advisors regarding the
consequences, if any, of the recently enacted Job and Growth Tax Relief
Reconciliation Act of 2003 in light of your particular circumstances.

TAXATION OF U.S. HOLDERS

      For purposes of this summary, you are a "U.S. Holder" if you are a
beneficial owner of a note, preferred shares, preferred ADSs, common shares or
common ADSs and you are for U.S. Federal income tax purposes:

      o     a citizen or resident of the United States;

      o     a corporation, or any other entity taxable as a corporation,
            created or organized in or under the laws of the United States or
            any state thereof, including the District of Columbia;

      o     an estate the income of which is subject to U.S. Federal income
            tax regardless of its source;

      o     a trust if a court within the United States is able to exercise
            primary supervision over its administration and one or more United
            States persons have the authority to control all substantial
            decisions of the trust; or

      o     a person otherwise subject to U.S. Federal income taxation on its
            worldwide income.

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      If a partnership holds notes, preferred shares, preferred ADSs, common
shares or common ADSs, the tax treatment of a partner will generally depend
upon the status of the partner and upon the activities of the partnership. A
prospective investor who is a partner of a partnership holding notes, preferred
shares, preferred ADSs, common shares or common ADSs should consult its own tax
advisor.

      A "Non-U.S. Holder" is a beneficial owner of a note, preferred shares,
preferred ADSs, common shares or common ADSs who or which is not a U.S. Holder.

      For U.S. Federal income tax purposes, a U.S. Holder of an ADS will be
treated as the beneficial owner of the preferred shares or common shares
represented by the applicable ADS.

      NOTES

      Interest and Additional Amounts

      Interest on the notes (including additional amounts) will generally be
includible in a U.S. Holder's gross income at the time the interest is accrued
or received, in accordance with the U.S. Holder's regular method (cash or
accrual) of tax accounting. To the extent that amounts are withheld and
additional amounts are paid on the notes, a U.S. Holder will be required to
report income in an amount greater than the cash received on the payments.

      Sale, Exchange, Retirement or Other Disposition

      Unless a nonrecognition provision applies, a U.S. Holder generally will
recognize capital gain or loss upon the sale, exchange, retirement or other
disposition of a note in an amount equal to the difference between the amount
realized upon such sale, exchange, retirement or other disposition (less any
accrued interest not yet taken into income which will be taxable as ordinary
interest income) and the U.S. Holder's tax basis in such note. Any such capital
gain or loss will be long-term capital gain or loss if the U.S. Holder has held
the note for more than one year at the time of sale, exchange, retirement or
other disposition. A U.S. Holder's ability to offset capital losses against
ordinary income is limited.

      Foreign Tax Credit

      Interest on the notes (including any additional amounts) will be treated
as foreign source income for U.S. Federal income tax purposes, which may be
relevant to a U.S. Holder in calculating such U.S. Holder's foreign tax credit
limitation. A U.S. Holder may be eligible, subject to a number of complex
limitations, for a foreign tax credit or deduction against such U.S. Holders
U.S. Federal tax income liability for taxes withheld on the notes. The
limitation on foreign taxes eligible for credit is calculated separately with
respect to specific classes of income. For this purpose, interest on the notes
(including any additional amounts) will be treated as "high withholding tax
interest" and, if interest on the notes (including any additional amounts) were
to become subject to a withholding tax at a rate of less than five percent
(5%), then such interest would generally constitute "passive income". We urge
all holders to consult their tax advisors regarding the availability of the
U.S. foreign tax credit under their particular circumstances.

      Any gain or loss realized on the sale, exchange, retirement or other
disposition of a note generally will be treated as U.S. source for purposes of
computing the U.S. foreign tax credit limitation.

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PREFERRED SHARES, PREFERRED ADSS, COMMON SHARES, COMMON ADSS

      DISTRIBUTIONS ON PREFERRED SHARES, PREFERRED ADSS, COMMON SHARES OR
COMMON ADSS.

      Subject to the discussion below concerning PFICs, the gross amount of
distributions paid by us to a U.S. Holder (including amounts withheld to pay
Brazilian withholding taxes) with respect to preferred shares, preferred ADSs,
common shares or common ADSs (including distributions of interest on
shareholders' equity) generally will be taxable to such U.S. Holder as ordinary
dividend income or qualified dividend income (as further described below) to
the extent that such distribution is paid, actually or constructively, out of
our current or accumulated earnings and profits (as determined for U.S. Federal
income tax purposes). Distributions in excess of our current or accumulated
earnings and profits will be treated first as a non-taxable return of capital
reducing (on a dollar-for-dollar basis) such U.S. Holder's tax basis in the
preferred shares, preferred ADSs, common shares or common ADSs, as applicable.
Any distribution in excess of such tax basis will be treated as capital gain
and will be either long-term or short-term capital gain depending upon whether
the U.S. Holder held the preferred shares, preferred ADSs, common shares or
common ADSs, as applicable, for more than one year.

      Dividends received by a U.S. Holder will generally be taxed at ordinary
income tax rates. However, pursuant to the Jobs and Growth Tax Relief
Reconciliation Act of 2003, in the case of dividends that constitute qualified
dividend income and are received by an individual U.S. Holder during the tax
years beginning after 2002 and before 2009, such dividends will be taxed at the
same rate that is applicable to long-term capital gains. For this purpose,
qualified dividend income includes any dividends paid with respect to stock in
a foreign corporation if such stock is "readily tradable on an established
securities market in the United States". Although it is not clear what
constitutes "readily tradable" for this purpose, based on the legislative
history to the Jobs and Growth Tax Relief Reconciliation Act of 2003, the
Company believes that each of the preferred ADSs and common ADSs will be
treated as traded on an established securities market in the U.S. because they
are listed and traded on the New York Stock Exchange. However, because the
preferred shares and common shares are listed and traded only on a non-U.S.
stock exchange, it is not clear whether they should be treated as traded on an
established securities market in the U.S.

      A U.S. Holder will be entitled, subject to a number of complex rules and
limitations, to claim a United States foreign tax credit in respect of any
Brazilian withholding taxes imposed on distributions received on preferred
shares, preferred ADSs, common shares or common ADSs. U.S. Holders who do not
elect to claim a foreign tax credit may instead claim a deduction in respect of
such withholdings. Dividends received with respect to the preferred shares,
preferred ADSs, common shares or common ADSs will be treated as foreign source
income and generally will constitute "passive income" for U.S. foreign tax
credit limitation purposes. We urge all  holders to consult their tax advisors
regarding the availability of the foreign tax credit under their particular
circumstances.

      Dividends paid by us generally will not be eligible for the dividends
received deduction generally available to certain U.S. corporate shareholders.

      The amount of any cash distribution paid in Brazilian currency will equal
the U.S. dollar value of the distribution, calculated by reference to the
exchange rate in effect at the time the distribution is received by the
depositary (in the case of ADSs) or by the U.S. Holder (in the case of
preferred shares or common shares held directly by such U.S. Holder),
regardless of whether the payment is in fact converted to U.S. dollars at that
time. A U.S. Holder should not recognize any foreign currency gain or loss if
such Brazilian currency is converted into U.S. dollars on the date received. If
the Brazilian currency is not converted into U.S. dollars on the date of
receipt, however, gain or loss may be recognized upon a subsequent sale or
other disposition of the Brazilian currency. Such foreign currency gain or
loss, if any, generally will be U.S. source ordinary income or loss.


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      Section 305 of the Code provides special rules for the tax treatment of
preferred stock. According to the Treasury Regulations under that section, the
term preferred stock generally refers to stock which enjoys certain limited
rights and privileges (generally associated with specified dividend and
liquidation priorities) but does not participate in corporate growth to any
significant extent. While our preferred shares have some preferences over our
common shares, the preferred shares are not fixed as to dividend payments or
liquidation value; thus, although the matter is not entirely clear, we believe
and have taken and intend to continue to take the position, that the preferred
shares should be treated as "common stock" within the meaning of Section 305 of
the Code. If the preferred shares are treated as "common stock" for purposes of
Section 305 of the Code, distributions to U.S. Holders of additional shares of
such "common stock" or preemptive rights relating to such "common stock" with
respect to their preferred shares or preferred ADSs that are made as part of a
pro rata distribution to all shareholders in most instances will not be subject
to U.S. Federal income tax. On the other hand, if the preferred shares are
treated as "preferred stock" within the meaning of Section 305 of the Code, and
if the U.S. Holder receives a distribution of additional shares or preemptive
rights as described in the preceding sentence, such distributions (including
amounts withheld in respect of any Brazilian taxes) will be treated as
dividends that can be included in the U.S. Holders' gross income to the same
extent and in the same manner as distributions payable in cash. In that event,
the amount of such distribution (and the basis of the new shares or preemptive
rights so received) will equal the fair market value of the shares or
preemptive rights on the date of distribution.

      SALE, EXCHANGE OR OTHER DISPOSITION OF PREFERRED SHARES, PREFERRED ADSS,
COMMON SHARES OR COMMON ADSS.

      A U.S. Holder will generally recognize capital gain or loss upon the
sale, exchange or other disposition of preferred shares, preferred ADSs, common
shares or common ADSs, as applicable, measured by the difference between the
U.S. dollar value of the amount received and the U.S. Holder's tax basis
(determined in U.S. dollars) in the preferred shares, preferred ADSs, common
shares or common ADSs, as applicable. If a Brazilian tax is withheld on the
sale or disposition of a share, the amount realized by a U.S. Holder will
include the gross amount of the proceeds of that sale or disposition before
deduction of the Brazilian tax. Any gain or loss will be long-term capital gain
or loss if the preferred shares, preferred ADSs, common shares or common ADSs
have been held for more than one year. Your ability to deduct capital losses is
subject to limitations. Capital gain or loss, if any, realized by a U.S. Holder
on the sale, exchange or other disposition of a common share, common ADS,
preferred share or preferred ADS, as applicable, generally will be treated as
United States source income or loss for U.S. foreign tax credit purposes.
Consequently, in the case of a disposition of a common share or preferred share
that is subject to Brazilian tax imposed on the gain (or, in the case of a
deposit, in exchange for a common ADS or preferred ADS of a common share or
preferred share, as the case may be, that is not registered pursuant to
Resolution No. 2,689/00, on which a Brazilian capital gains tax is imposed (see
"-Brazilian Tax Considerations-Taxation of Gains")), the U.S. Holder may not be
able to benefit from the foreign tax credit for that Brazilian tax unless it
can apply (subject to applicable limitations) the credit against U.S. tax
payable on other income from foreign sources in the appropriate income
category, or, alternatively, it may take a deduction for the Brazilian tax if
such U.S. Holder elects to deduct all of its foreign income taxes.

      PASSIVE FOREIGN INVESTMENT COMPANY RULES.

      Based upon the nature of its current and projected income, assets and
activities, we do not believe that we are, and we do not expect the preferred
shares, preferred ADSs, common shares or common ADSs to be considered shares a,
PFIC for U.S. Federal income tax purposes. In general, a foreign corporation is
a PFIC if, for any taxable year in which the U.S. Holder holds stock in the
foreign corporation, at least 75% of its gross income is passive income or at
least 50% of the value of its assets (determined on the basis of a quarterly
average) produce passive income or are held for the production of passive
income. The


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determination of whether the preferred shares, preferred ADSs, common shares
or common ADSs constitute shares of a PFIC is a factual determination made
annually and thus may be subject to change. Subject to certain exceptions,
once a U.S. Holder's preferred shares or common shares, as applicable, are
treated as shares in a PFIC, they remain shares in a PFIC. In addition,
dividends received by a U.S. Holder from a PFIC will not constitute qualified
dividend income.

      If we are treated as a PFIC, contrary to the discussion above, a U.S.
Holder would be subject to special rules with respect to (a) any gain realized
on the sale or other disposition of common shares, common ADSs, preferred
shares or preferred ADSs and (b) any "excess distribution" by us to the U.S.
Holder (generally, any distribution during a taxable year in which
distributions to the U.S. Holder on the common shares, common ADSs, preferred
shares or preferred ADSs exceed 125% of the average annual taxable distribution
the U.S. Holder received on the common shares, common ADSs, preferred shares or
preferred ADSs during the preceding three taxable years or, if shorter, the
U.S. Holder's holding period for the common shares, common ADSs, preferred
shares or preferred ADSs). Under those rules (a) the gain or excess
distribution would be allocated ratably over the U.S. Holder's holding period
for the common shares, common ADSs, preferred shares or preferred ADSs, (b) the
amount allocated to the taxable year in which the gain or excess distribution
is realized and to taxable years before the first day we became a PFIC would be
taxable as ordinary income, (c) the amount allocated to each prior year (with
certain exceptions) would be subject to tax at the highest tax rate in effect
for that year, and the interest charge generally applicable to underpayments of
tax would be imposed in respect of the tax attributable to each such year.

      A U.S. Holder who owns common shares, common ADSs, preferred shares or
preferred ADSs during any year we are a PFIC must file Internal Revenue Service
Form 8621. In general, if we are treated as a PFIC, the rules described in the
second paragraph of this section can be avoided by a U.S. Holder that elects to
be subject to a mark-to-market regime for stock in a PFIC. A U.S. Holder may
elect mark-to- market treatment for its common shares, common ADSs, preferred
shares or preferred ADSs, provided the common shares, common ADSs, preferred
shares or preferred ADSs, for purposes of the rules, constitute "marketable
stock" as defined in Treasury Regulations. A U.S. Holder electing the
mark-to-market regime generally would treat any gain recognized under
mark-to-market treatment or on an actual sale as ordinary income and would be
allowed an ordinary deduction for any decrease in the value of common shares,
common ADSs, preferred shares or preferred ADSs in any taxable year and for any
loss recognized on an actual sale, but only to the extent, in each case, of
previously included market-to-market income not offset by previously deducted
decreases in value. A U.S. Holder's basis in common shares, common ADSs,
preferred shares or preferred ADSs would increase or decrease by gain or loss
taken into account under the mark-to-market regime. A market-to-market election
is generally irrevocable. We do not currently plan to provide holders with
information sufficient to permit any holder to make an election to treat the
Company as a "qualified electing fund".

      DEPOSITS, WITHDRAWALS AND PRE-RELEASE

      Deposits or withdrawals of preferred shares or common shares in exchange
for preferred ADSs or common ADSs, as applicable, will not result in the
realization of any gain or loss for U.S. Federal income tax purposes. The U.S.
Treasury Department, however, has expressed concerns that parties involved in
transactions where depositary shares are pre-released may be taking actions
that are not consistent with the claiming of foreign tax credits by the holders
of the applicable ADSs. Accordingly, the analysis of the credibility of
Brazilian taxes described above could be affected by future actions that may be
taken by the U.S. Treasury Department.

                                     148

<PAGE>


TAXATION OF NON-U.S. HOLDERS

      NOTES

      Payments of principal or interest are currently exempt from U.S. Federal
income tax, including withholding tax, if paid to a Non-U.S. Holder.

      A Non-U.S. Holder will not be subject to U.S. Federal income tax on any
gain realized on the redemption, sale, exchange or other dispositions of a
note, provided that such gain is not effectively connected with the Non-U.S.
Holder's conduct of a United States trade or business and, in the case of an
individual, such holder is not present in the United States for a total of 183
days or more during the taxable year in which such gain is realized and certain
other conditions are satisfied.

      PREFERRED SHARES, PREFERRED ADSS, COMMON SHARES OR COMMON ADSS.

      Non-U.S. Holders generally will not be subject to U.S. Federal income or
withholding tax on dividends received from us with respect to preferred shares,
preferred ADSs, common shares or common ADSs, unless such income is considered
effectively connected with the Non-U.S. Holder's conduct of a United States
trade or business (and, if required by an applicable income tax treaty, the
income is attributable to a permanent establishment or fixed base maintained in
the United States).

      Non-U.S. Holders generally will not be subject to U.S. Federal income tax
on any gain realized upon the sale, exchange or other disposition of preferred
shares, preferred ADSs, common shares or common ADSs unless:

      o     such gain is considered effectively connected with the Non-U.S.
            Holder's conduct of a United States trade or business (and, if
            required by an applicable income tax treaty, the income is
            attributable to a permanent establishment or fixed base maintained
            in the United States); or

      o     such Non-U.S. Holder is an individual who is present in the United
            States for 183 days or more during the taxable year of the
            disposition and certain other conditions are met.

      In addition, any effectively connected dividends or gains realized by a
corporate Non-U.S. Holder may also, under certain circumstances, be subject to
an additional branch profits tax at a rate of 30% (or such lower rate as may be
specified by an applicable income tax treaty).

BACKUP WITHHOLDING AND INFORMATION REPORTING

      In general, payments of principal and interest on the notes, dividends
paid on, or proceeds from the sale, exchange, retirement or other dispositions
of the notes, dividends on preferred shares, preferred ADSs, common shares or
common ADSs and payments of the proceeds of a sale, exchange, retirement or
other disposition of notes,  preferred shares, preferred ADSs, common shares or
common ADSs, may be subject to information reporting to the United States
Internal Revenue Service ("IRS") and, possibly, United States backup
withholding. Backup withholding will not apply, however, to a holder who
furnishes a correct taxpayer identification number or certificate of foreign
status and makes any other required certification on IRS Form W-9. Non-U.S.
Holders generally will not be subject to United States information reporting or
backup withholding . However, Non-U.S. Holders may be required to provide
certification of non-U.S. status in connection with payments received in the
United States or through certain U.S related financial intermediaries. Amounts
withheld as backup withholding may be credited against a holder's U.S. Federal
income tax liability, and a holder may obtain a refund of any excess


                                     149

<PAGE>


amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the IRS and furnishing any required information.

      THE PRECEDING DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH INVESTOR SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS TO
THE PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF NOTES,
PREFERRED SHARES, PREFERRED ADSs, COMMON SHARES OR COMMON ADSs, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND OF
ANY PROPOSED CHANGES IN APPLICABLE LAW.



                             DOCUMENTS ON DISPLAY

      AmBev is subject to the informational reporting requirements of the
United States Securities Exchange Act of 1934, as amended, and files with the
SEC:

      o     annual reports;

      o     certain other reports that it makes public under Brazilian law,
            files with the Brazilian stock exchanges or distributes to
            shareholders; and

      o     other information.

      You may read and copy any reports or other information that AmBev files
at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's regional offices located at the Woolworth Building, 233
Broadway, New York, New York 10279 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms.
Electronic filings made through the Electronic Data Gathering, Analysis and
Retrieval System are also publicly available through the Securities and
Exchange Commission's web site on the Internet at www.sec.gov. In addition,
material filed by AmBev may also be inspected at the offices of the New York
Stock Exchange at 20 Broad Street, New York, New York 10005.

      As a foreign private issuer, AmBev is exempt from the rules under the
Exchange Act prescribing the furnishing and content of proxy statements and
will not be required to file proxy statements with the SEC, and its officers,
directors and principal shareholders will be exempt from the reporting and
"short swing" profit recovery provisions contained in Section 16 of the
Exchange Act.

      You may obtain documents from AmBev by requesting them in writing, at the
following addresses or by telephone:

      Companhia de Bebidas das AMERICAS-AmBev
      Attention:           Investor Relations Department
      Telephone numbers:   (55-11) 2122-1415
                           (55-11) 2122-1414
      Fax:                 (55-11) 2122-1526
      Email:               ir@ambev.com.br

      You may obtain additional information about AmBev on its web site at
www.ambev.com.br. The information contained therein is not part of this annual
report.

                                     150


<PAGE>


Quantitative and Qualitative Disclosures About Market Risk


           QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

MARKET RISK

      We are exposed to various market risks, including changes in foreign
currency exchange rates and interest rates and changes in the prices of certain
commodities, including malt, aluminum and sugar. Market risk is the potential
loss arising from adverse changes in market rate and prices. We enter into
derivatives and other financial instruments for purposes other than trading, in
order to manage and reduce the impact of fluctuations in commodity prices
(particularly that of aluminum), in foreign currency exchange rates and in
interest rates. We have established policies and procedures for risk assessment
and the approval, reporting and monitoring of derivative financial activities.
Decisions regarding hedging are made on a case-by-case basis, taking into
consideration the amount and duration of the exposure, market volatility and
economic trends.

      These instruments do not qualify for deferral, hedge, accrual or
settlement accounting and are marked-to-market value, with the resulting gains
and losses reflected in the statement of operations within financial income and
expenses, respectively. See note 2 (v) to AmBev's consolidated financial
statements for a discussion of the accounting policies and information on
derivative financial instruments.

      We have a policy of entering into contracts only with parties that have
high credit ratings. The counterparties to these contracts are major financial
institutions, and we do not have significant exposure to any single
counterparty. We do not anticipate a credit loss from counterparty non-
performance. Our trading securities consist mainly of fixed-term obligations
and government securities.

COMMODITY RISK

      We use a large volume of agricultural materials to produce our products,
including malt and hops for our beer and sugar, guarana, other fruits and
sweeteners for our soft drinks. See "Information on the Company-AmBev Business
Overview-Raw Materials". We purchase a significant portion of our malt and all
of our hops outside of Brazil. We purchase the remainder of our malt and our
sugar, guarana and other fruits and sweeteners locally. AmBev also purchases
substantial quantities of aluminum cans.

      We produce approximately 18% of the guarana we use and approximately
70% of our malt. The remainder and all other commodities are purchased from
third parties. We believe that adequate supplies of the commodities we use are
available at the present time, but we cannot predict the future availability of
these commodities or the prices we will have to pay for such commodities. The
commodity markets have experienced and will continue to experience price
fluctuations. We believe that the future price and supply of agricultural
materials will be determined by, among other factors, the level of crop
production, weather conditions, export demand, and government regulations and
legislation affecting agriculture, and that the price of aluminum will be
largely influenced by international market prices. See "Information on the
Company-AmBev Business Overview-Raw Materials".

      All of the hops we purchase in the international markets outside of South
America we pay for in U.S. dollars. In addition, although we purchase aluminum
cans in Brazil, the price we pay is directly influenced by the fluctuation of
international commodity prices.

                                     151

<PAGE>





      As of December 31, 2002, our derivative activities consisted of aluminum
swaps. The table below provides information about our significant commodity
risk sensitive instruments as of December 31, 2002. The contract terms of these
instruments have been categorized by expected maturity dates.

<TABLE>
<CAPTION>
                                                              PRINCIPAL MATURITY PERIODS(1)
                             -----------------------------------------------------------------------------------------
<S>                           <C>       <C>        <C>        <C>        <C>          <C>            <C>      <C>
                             2002      2003       2004       2005       2006       THEREAFTER       TOTAL(2)  FAIR
                                                                                                              VALUE(2)
                             -------  -------   --------   ---------  ---------   -------------   ----------- --------
                                                          (R$ million, except price per ton)
DERIVATIVES INSTRUMENTS
ALUMINUM SWAPS
 Notional Amount.........             141.0                                                           141.0    3.9
 Average Price (R$/ton)..           4,725.4
</TABLE>

(1)   Negative notional amounts represent an excess of liabilities over assets
      on any given moment. In our 2001 annual report, we presented assets and
      liabilities separately.

(2)   For cash and debt instruments, total represents the carrying value of
      those instruments within the balance sheet and is therefore directly
      comparable with the fair value of the instrument, included within the
      fair value column. For derivative instruments, total represents the
      total value of derivative instrument contracts (notional value) within
      the forward, future and swap portfolio, and not a balance sheet value.
      The unrealized gain or loss on the instrument at the balance sheet date
      is included within the financial statements at fair value and is
      therefore represented under the fair value column.

FOREIGN EXCHANGE RISK

      We are exposed to fluctuations in foreign exchange rate movements because
substantially all of our revenues are in reais, while a significant portion of
our debt is denominated in or indexed to foreign currencies, particularly the
U.S. dollar and the Japanese Yen. In addition, a significant portion of our
operating expenses, in particular those related to hops, malt and aluminum, are
also denominated in or linked to the U.S. dollar. We enter into derivative
financial instruments to manage and reduce the impact of changes in foreign
currency exchange rates in respect of our U.S. dollar-denominated and Yen-
denominated or indexed debt. From January 1, 1999 until December 31, 2002, the
Brazilian real depreciated by 186.7% against the U.S. dollar, and, as of
December 31, 2002, the commercial market rate for purchasing U.S. dollars was
R$3.5333 per U.S.$1.00. The Brazilian real depreciated against the U.S. dollar
by 34.3% in 2002, including a depreciation of 19.5% during the last six months
of 2002.

      As of December 31, 2002, derivative activities consisted of foreign
currency forward contracts, foreign currency swaps and future contracts. The
table below provides information about our significant foreign exchange rate
risk sensitive instruments as of December 31, 2002. The contract terms of these
instruments have been categorized by expected maturity dates.

<TABLE>
<CAPTION>
                                                              PRINCIPAL MATURITY PERIODS(1)
                             -----------------------------------------------------------------------------------------
<S>                           <C>       <C>        <C>        <C>        <C>          <C>            <C>      <C>
                             2002      2003       2004       2005       2006       THEREAFTER       TOTAL(2)  FAIR
                                                                                                              VALUE(2)
                             -------  -------   --------   ---------  ---------   -------------   ----------- --------
                                                          (R$ million, except price per ton)
DEBT INSTRUMENTS
SYNDICATED LOAN (YEN)
 Notional Amount..........             (7.1)    (1,151.9)                                          (1,158.9)  (1,158.9)
 Average Pay Rate.........              2.37%        2.37%
U.S. DOLLAR DEBT DENOMINATED
(FIXED RATE)
 Notional Amount..........            (67.7)      (105.1)    (23.6)     (23.6)      (1,812.9)      (2,032.8)  (2,032.8)
 Average Pay Rate.........             11.94%       11.94%    11.94%     11.94%         11.94%
INTERNATIONAL DEBT
U.S. Dollar Debt Denominated
(Float Rate)                         (256.4)        (7.1)    (44.4)                                  (308.0)    (308.0)
 LIBOR....................              2.75%        2.75%     2.50%


</TABLE>


                                     152


<PAGE>


<TABLE>
<CAPTION>
                                                              PRINCIPAL MATURITY PERIODS(1)
                             -----------------------------------------------------------------------------------------
<S>                           <C>       <C>        <C>        <C>        <C>          <C>            <C>      <C>
                             2002      2003       2004       2005       2006       THEREAFTER       TOTAL(2)  FAIR
                                                                                                              VALUE(2)
                             -------  -------   --------   ---------  ---------   -------------   ----------- --------
                                                          (R$ million, except price per ton)
CASH INSTRUMENTS
CASH AND CASH EQUIVALENT
DENOMINATED IN U.S. DOLLAR
 Notional Amount..........  1,243.4                                                                 1,243.4    1,243.4
 Average Interest Rate          1.38%
U.S. TRADING SECURITIES
DENOMINATED IN U.S. DOLLAR
 Notional Amount...........   909.5                                                                   909.5      909.5
 Average Interest Rate.....     1.38%

BRAZILIAN TRADING SECURITIES
DENOMINATED IN U.S. DOLLAR
 Notional Amount...........   227.7                                                                   227.7      227.7
 Average Interest Rate         21.80%

DERIVATIVES INSTRUMENTS
BM&F DDI AND DOLLAR FUTURE
 Notional Amount..........            (806.3)     874.1                 173.1        558.3            799.2        9.9
 Average Interest Rate                  14.59%     21.89%                22.37%       22.50%
U.S.$ X BRL CROSS CURRENCY
INTEREST RATE SWAP
 Notional Amount..........           1,445.5    2,592.0                              985.1          5,022.6      188.3
 Average Interest Rate....              20.32%     21.35%                             21.66%
YEN X U.S.$ CROSS CURRENCY
INTEREST RATE SWAP
 Notional Amount..........                      1,120.8                                             1,120.8       20.1
 Average Interest Rate
INTEREST RATE SWAP LIBOR
3M X FIXED
 Notional Amount..........                      1,113.0                                             1,113.0       (5.3)
 Average Interest Rate                                                 4.67%
INTEREST RATE SWAP LIBOR
1M X FIXED
 Notional Amount..........             106.0                                                          106.0        0
 Average Interest Rate
INTEREST RATE SWAP LIBOR
6M X FIXED
 Notional Amount..........               8.8                                                            8.8        0
 Average Interest Rate
</TABLE>

-----------------------

(1)   Negative notional amounts represent an excess of liabilities over assets
      on any given moment. In our 2001 annual report, we presented assets and
      liabilities separately.

(2)   For cash and debt instruments, total represents the carrying value of
      those instruments within the balance sheet and is therefore directly
      comparable with the fair value of the instrument, included within the
      fair value column. For derivative instruments, total represents the
      total value of derivative instrument contracts (notional value) within
      the forward, future and swap portfolio, and not a balance sheet value.
      The unrealized gain or loss on the instrument at the balance sheet date
      is included within the financial statements at fair value and is
      therefore represented under the fair value column.

      Our foreign currency exposure gives rise to market risks associated with
exchange rate movements, mainly against the U.S. dollar. Foreign currency-
denominated liabilities at December 31, 2002 included debt of R$3,498.6
million. Our net foreign currency exposure (foreign currency debt less our
foreign currency and interest rate swap contracts in our foreign currency-
denominated debt) was R$26.8 million at December 31, 2002 compared to nil in
2001.


                                     153


<PAGE>


      INTEREST RATE RISK

      We use interest rate swap agreements to manage interest risks associated
with changing rates. The differential to be paid or received is accrued as
interest rates change and is recognized in interest income or expense,
respectively, over the life of the particular contracts. We are exposed to
interest rate volatility with respect to our cash and cash equivalents, trading
securities and fixed and floating rate debt. Our dollar-denominated cash
equivalents generally bear interest at a floating rate.

      We are exposed to interest rate volatility with regard to existing
issuances of fixed rate debt, existing issuances of variable rate debt,
currency future and forward swaps agreements, cash and cash equivalents and
trading securities. We manage our debt portfolio in response to changes in
interest rates and foreign currency rates by periodically retiring, redeeming
and repurchasing debt and using derivative financial instruments.

      At December 31, 2002 R$3,390.0 million of our debt bore interest at fixed
rates. The remainder of our debt, R$1,096.0 million at December 31, 2002, bore
interest at floating rates. See "Operating and Financial Review-Liquidity and
Capital Resources-Debt-Long-Term Debt".

      The table below provides information about our significant interest rate
sensitive instruments. For variable interest rate debt, the rate presented is
the weighted average rate calculated as of December 31, 2002. The contract
terms of these instruments have been categorized by expected maturity dates.

                      INSTRUMENTS WITH INTEREST RATE RISK

<TABLE>
<CAPTION>
                                                              PRINCIPAL MATURITY PERIODS(1)
                             -----------------------------------------------------------------------------------------
<S>                           <C>       <C>        <C>        <C>        <C>          <C>            <C>      <C>
                             2002      2003       2004       2005       2006       THEREAFTER       TOTAL(2)  FAIR
                                                                                                              VALUE(2)
                             -------  -------   --------   ---------  ---------   -------------   ----------- --------
                                                          (R$ million, except price per ton)
DEBT INSTRUMENTS
SYNDICATED LOAN (YEN)
 Notional Amount..........             (7.1)    (1,151.9)                                          (1,158.9) (1,158.9)
 Average Pay Rate.........              2.37%        2.37%
U.S. DOLLAR DEBT DENOMINATED
(FIXED RATE)
 Notional Amount..........            (67.7)      (105.1)   (23.6)      (23.6)      (1,812.9)      (2,032.8) (2,032.8)
 Average Pay Rate.........             11.94%       11.94%   11.94%      11.94%         11.94%
INTERNATIONAL DEBT
U.S. Dollar Debt Denominated
(Floating Rate)                      (256.4)        (7.1)   (44.4)                                   (308.0)   (308.0)
 LIBOR....................              2.75%        2.75%    2.50%
REAIS DEBT DENOMINATED
(FLOAT RATE-TJLP)
 Notional Amount..........           (237.7)      (198.9)   (98.1)      (47.1)         (64.3)        (646.0)   (646.0)
 TJLP + Average Pay Rate..              2.92%        2.92%    2.92%       2.92%          2.92%
REAIS DEBT-ICMS (FIXED RATE)
 Notional Amount..........            (31.4)        (5.2)   (73.1)     (101.4)        (130.8)        (342.0)   (342.0)
 Average Pay Rate.........              1.82%        1.82%    1.82%       1.82%          1.82%

CASH INSTRUMENTS
CASH AND CASH EQUIVALENT
DENOMINATED IN U.S. DOLLAR
 Notional Amount..........   1,243.4                                                                1,243.4   1,243.4
 Average Interest Rate....       1.38%
U.S. TRADING SECURITIES
DENOMINATED IN U.S. DOLLAR
 Notional Amount..........     909.5                                                                  909.5     909.5

</TABLE>

                                     154


<PAGE>


<TABLE>
<CAPTION>
                                                              PRINCIPAL MATURITY PERIODS(1)
                             -----------------------------------------------------------------------------------------
<S>                           <C>       <C>        <C>        <C>        <C>          <C>            <C>      <C>
                             2002      2003       2004       2005       2006       THEREAFTER       TOTAL(2)  FAIR
                                                                                                              VALUE(2)
                             -------  -------   --------   ---------  ---------   -------------   ----------- --------
                                                          (R$ million, except price per ton)
 Average Interest Rate....       1.38%
BRAZILIAN TRADING SECURITIES
DENOMINATED IN U.S. DOLLAR
 Notional Amount..........     227.7                                                                  227.7     227.7
 Average Interest Rate....      21.80%
BRAZILIAN TRADING SECURITIES
DENOMINATED IN REAIS
 Notional Amount..........     699.6                                                                  699.6     699.6
 Average Interest Rate....      24.82%

DERIVATIVES INSTRUMENTS
BM&F DI FUTURE
 Notional Amount..........           (207,4)                                                         (207.4)      0
 Average interest rate....             25.19%
BM&F DDI AND DOLLAR FUTURE
 Notional Amount..........           (806.3)       874.1                173.1         558.3           799.2      9.9
 Average interest rate....             14.59%       21.89%               22.37%        22.50%
U.S.D X BRL CROSS CURRENCY
INTEREST RATE SWAP
 Notional Amount..........          1,445.5      2,592.0                               985.1        5,022.6    188.3
 Average interest rate....             20.32%       21.35%                              21.66%
YEN X U.S.D CROSS CURRENCY
INTEREST RATE SWAP
 Notional Amount..........                       1,120.8                                            1,120.8     20.1
 Average interest rate....


INTEREST RATE SWAP LIBOR
3M X FIXED
 Notional Amount..........                       1,113.0                                            1,113.0     (5.3)
 Average interest rate....                           4.67%
INTEREST RATE SWAP LIBOR
1M X FIXED
 Notional Amount..........            106.0                                                           106.0      0
 Average interest rate....
INTEREST RATE SWAP LIBOR
6M X FIXED
 Notional Amount..........              8.8                                                             8.8      0
 Average interest rate....

</TABLE>

(1)   Negative notional amounts represent an excess of liabilities over assets
      on any given moment. In the 2001 Form 20-F, we presented assets and
      liabilities separately.

(2)   For cash and debt instruments, total represents the carrying value of
      those instruments within the balance sheet, and is therefore directly
      comparable with the fair value of the instrument included within the
      fair value column. For derivative instruments, the total represents the
      total value of derivative instrument contracts (notional value) within
      the forward, future and swap portfolio, and not a balance sheet value.
      The unrealized gain or loss on the instrument at the balance sheet date
      is included within the financial statements at Fair Value, and is
      therefore represented under the Fair Value column.


                                     155


<PAGE>


      Most of the floating rate debt accrues interest at TJLP (Taxa de Juros de
Longo Prazo) plus a spread. The TJLP is a long-term nominal interest rate fixed
by the Brazilian government on a quarterly basis. During the period set forth
below the TJLP was:

                                                  2002   2001   2000   1999
                                                 -----  -----  -----  -----
1st Quarter....................................  10.00   9.25  12.00  12.84
2nd Quarter....................................  10.00   9.25  11.00  13.48
3rd Quarter....................................  11.00   9.50  10.25  14.05
4th Quarter....................................  12.00  10.00   9.75  12.50

      We have not experienced, and do not expect to experience, difficulty
obtaining financing or refinancing existing debt.

Description of Securities Other than Equity Securities
      Not Applicable


                                    PART II

Defaults, Dividend Arrearages and Delinquencies

            Not Applicable

Material Modifications to the Rights of Security Holders and Use of Proceeds

            Not applicable.

Disclosure Controls and Procedures and the Status of Internal Controls

      As of a date within 90 days prior to the date of this annual report (the
"Evaluation Date"), the Company conducted an evaluation (under the supervision
and with the participation of the Company's management, including the chief
executive officer and chief financial officer), pursuant to Rule 13a-15
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on this evaluation, the
Company's chief executive officer and chief financial officer concluded that,
as of the Evaluation Date, such disclosure controls and procedures were
reasonably designed to ensure that information required to be disclosed by the
Company in reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission.

      Since the last evaluation by the Company's management of the Company's
internal controls, there have not been any significant changes in the internal
controls or in other factors that could significantly affect the internal
controls.


                                     156


<PAGE>

                                   PART III

Financial Statements

            The Company is furnishing financial statements pursuant to the
instructions of Item 18 of Form 20-F.

Financial Statements

            See pages F-1 through F- 116.

            Index to Consolidated Financial Statements

                                                            Page
                                                            ----
Report of Independent Accountants..............             F-2
Consolidated Balance Sheet.....................             F-3
Consolidated Statement of Operations...........             F-5
Statements of Changes in Shareholders' Equity..             F-7
Consolidated Statement of Changes in Financial
  Position.....................................             F-9
Consolidated Statement of Cash Flows...........             F-11
Notes of Financial Statements..................             F-13


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Exhibits and Certifications

      1.1   By-laws of Companhia de Bebidas das AMERICAS-AmBev
            (English-language translation) (filed with the Securities and
            Exchange Commission with the original 2002 annual report on Form
            20-F of AmBev on June 30, 2003).

      1.2   By-laws of Companhia Brasileira de Bebidas (CBB) (English-language
            translation) (incorporated by reference to Exhibit 3.2 to Form F-4
            filed by AmBev on August 29, 2002).

      2.1   Form of Common ADS Deposit Agreement among AmBev, The Bank of
            New York, as depositary, and the holders from time to time of
            Common ADSs (incorporated by reference to Exhibit A to Form F-6
            filed by AmBev on October 20, 2000).

      2.2   Form of Preferred ADS Deposit Agreement among AmBev, The Bank of
            New York, as depositary, and the holders from time to time of
            Preferred ADSs (incorporated by reference to Exhibit A to Form F-6
            filed by AmBev on October 20, 2000).

      2.3   Form of American Depositary Receipt for Common ADSs (included in
            Exhibit 2.1).

      2.4   Form of American Depositary Receipt for Preferred ADSs (included in
            Exhibit 2.2).

      2.5   Form of Exchange Agent Agreement (incorporated by reference to
            Exhibit 1.1 to Form F-4 filed by AmBev on August 29, 2002).

      2.6   Indenture dated December 19, 2001 between CBB and The Bank of New
            York as Trustee (incorporated by reference to Exhibit 4.1 to Form
            F-4 filed by AmBev on August 29, 2002).

      2.7   Form of Note (contained in Exhibit 2.6).

      2.8   Guaranty dated December 19, 2001 between AmBev and The Bank of New
            York (incorporated by reference to Exhibit 4.3 to Form F-4 filed by
            AmBev on August 29, 2002).

      2.9   Insurance Policy for Expropriation and Currency Inconvertibility
            dated December 19, 2001 between Steadfast Insurance Company and The
            Bank of New York (incorporated by reference to Exhibit 4.5 to Form
            F-4 filed by AmBev on August 29, 2002).

      2.10  Agreement Regarding the Insurance Policy for Expropriation and
            Currency Inconvertibility dated December 19, 2001 among Steadfast
            Insurance Company, The Bank of New York, AmBev and CBB
            (incorporated by reference to Exhibit 4.6 to Form F-4 filed by
            AmBev on August 29, 2002).

      3.1   Shareholders' Agreement of Companhia de Bebidas das
            AMERICAS-AmBev dated as of July 1, 1999 among FAHZ, Braco, Ecap,
            AmBev, Jorge Paulo Lemann, Marcel Herrmann Telles, and Carlos
            Alberto da Veiga Sicupira (English-language translation)
            (incorporated by reference to Exhibit A to Amendment No. 1 to
            Schedule 13D relating to AmBev, filed by FAHZ, Braco and Ecap on
            October 27, 2000).

      3.2   Shareholders' Voting Rights Agreement of S-Braco
            Participacoes S.A. dated as of August 30, 2002 among Santa
            Judith, Santa Irene, Santa Estela. and Santa Prudencia
            Participacoes S.A., with Jorge Paulo Lemann, Carlos Alberto
            da Veiga Sicupira and Marcel Herrmann Telles as intervening
            parties, and S-Braco, Braco, Ecap and AmBev as


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            acknowledging parties (English-language translation) (incorporated
            by reference to Exhibit C to Amendment No. 2 to Schedule 13D
            relating to AmBev, filed by FAHZ, Braco and Ecap on November 29,
            2002).

      3.3   AmBev Share Transfer Agreement dated as of January 31, 2003, among
            BAC, Braco, Ecap, FAHZ and AmBev (incorporated by reference to
            Exhibit 2.7 to Amendment No. 1 to Schedule 13D relating to Quinsa,
            filed by AmBev on February 4, 2003).

      3.4   AmBev Governance Agreement dated as of January 31, 2003, among BAC,
            Braco, Ecap, FAHZ and AmBev (incorporated by reference to Exhibit
            2.8 to Amendment No. 1 to Schedule 13D relating to Quinsa, filed by
            AmBev on February 4, 2003).

      4.1   Performance Agreement between AmBev and the Conselho Administrativo
            de Defesa Economica (CADE), dated April 19, 2000 (incorporated
            by reference to Exhibit 10.8 to the Form F-4 filed by AmBev on
            August 29, 2000).

      4.2   Share Exchange Agreement dated as of May 1, 2002, between AmBev and
            Quinsa (incorporated by reference to Exhibit 2.1 to Schedule 13D
            relating to Quinsa, filed by AmBev on May 13, 2002)

      4.3   Stock Purchase Agreement dated as of May 1, 2002, between BAC and
            AmBev (incorporated by reference to Exhibit 2.2 to Schedule 13D
            relating to Quinsa, filed by AmBev on May 13, 2002).

      4.4   Amendment No. 1 to Stock Purchase Agreement dated as of January 31,
            2003, between BAC and AmBev (incorporated by reference to Exhibit
            2.3 to Amendment No. 1 to Schedule 13D relating to Quinsa, filed by
            AmBev on February 4, 2003).

      4.5   Letter Agreement dated January 13, 2003, between AmBev, BAC and
            Quinsa (incorporated by reference to Exhibit 2.4 to Amendment No. 1
            to Schedule 13D relating to Quinsa, filed by AmBev on February 4,
            2003).

      4.6   Quinsa Shareholders' Agreement dated as of January 31, 2003, among
            Quinsa, AmBev and BAC (incorporated by reference to Exhibit 2.5 to
            Amendment No. 1 to Schedule 13D relating to Quinsa, filed by AmBev
            on February 4, 2003).

      4.7   Registration Rights Agreement dated as of January 31, 2003, among
            BAC and AmBev (incorporated by reference to Exhibit 2.6 to
            Amendment No. 1 to Schedule 13D relating to Quinsa, filed by AmBev
            on February 4, 2003).

      4.8   Share Pledge Agreement dated as of January 31, 2003, among BAC,
            AmBev and Quinsa (incorporated by reference to Exhibit 2.9 to
            Amendment No. 1 to Schedule 13D relating to Quinsa, filed by AmBev
            on February 4, 2003).

      4.9   Escrow Agreement dated as of January 31, 2003, among BAC, AmBev and
            The Bank of New York (incorporated by reference to Exhibit 2.10 to
            Amendment No. 1 to Schedule 13D relating to Quinsa, filed by AmBev
            on February 4, 2003).

      4.10  Resolution of the Office of Competition, Deregulation and Consumer
            Advocacy of the Ministry of Production of the Republic of Argentina
            regarding the business combination of AmBev and Quinsa dated
            January 13, 2003 (English-language translation).

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<PAGE>


            (incorporated by reference to Exhibit 2.11 to Amendment No. 1 to
            Schedule 13D relating to Quinsa, filed by AmBev on February 4,
            2003).

      4.11  License Agreement dated as of January 31, 2003, between AmBev and
            Quinsa (filed with the Securities and Exchange Commission with the
            original 2002 annual report on Form 20-F of AmBev on June 30, 2003).

      4.12  Distribution Agreement dated as of January 31, 2003, between AmBev
            and Quinsa (filed with the Securities and Exchange Commission with
            the original 2002 annual report on Form 20-F of AmBev on June 30,
            2003).

      8.1   List of Material Subsidiaries of Companhia de Bebidas das
            AMERICAS-AmBev (filed with the Securities and Exchange Commission
            with the original 2002 annual report on Form 20-F of AmBev on June
            30, 2003).

      12.1  Principal Executive Officer Certification pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

      12.2  Principal Executive Officer Certification pursuant to Section 906
            of the Sarbanes-Oxley Act of 2002.

      12.3  Principal Financial Officer Certification pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

      12.4  Principal Financial Officer Certification pursuant to Section 906
            of the Sarbanes-Oxley Act of 2002.


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                                  SIGNATURES

      Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant, Companhia de Bebidas das AMERICAS-AmBev, certifies
that it meets all of the requirements for filing on Form 20-F and that it has
duly caused and authorized the undersigned to sign this Amendment No. 1 to the
annual report on its behalf.

                                    COMPANHIA DE BEBIDAS DAS AMERICAS-AMBEV

                                    By:  /s/ Magim Rodriguez Junior
                                         --------------------------------
                                         Name:  Magim Rodriguez Junior
                                         Title:  Chief Executive Officer

                                    By: /s/ Luis Felipe Pedreira Dutra Leite
                                        ---------------------------------
                                        Name:  Luis Felipe Pedreira Dutra Leite
                                        Title:  Chief Financial Officer
Date:  July 15, 2003.



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